Housing May Be Limping, but Lennar Corp. Is Getting Ready to Run
Lennar Corporation (NYSE:LEN) is an excellent company that you should strongly consider your portfolio if you believe in a strong housing rebound. That is because this company is engaged in homebuilding activities here in the United States. The company operates through several segments including Homebuilding East, Homebuilding Central, Homebuilding West, Homebuilding Southeast Florida, Homebuilding Houston, Financial Services, Rialto Investments, and Lennar Multifamily segments. Its homebuilding activities primarily include the construction and sale of single-family attached and detached homes to first-time, move-up, and active adult homebuyers, as well as the purchase, development, and sale of residential land.
The company also offers real estate related financial services, including mortgage financing, title insurance, and closing services for home buyers and others. In addition, it is involved in raising, investing, and managing third party capital, originating and securitizing commercial mortgage loans, as well as investing in real estate related mortgage loans, properties, and related securities. I am a believer in a housing rebound, despite how bad it has been. It’snot secret that this rebound from the Great Recession has been, weak, to put it best. However, it is only a matter of time before there is a strong rebound in housing. But Lennar is a buy now. It is performing very well, and just recently beat earnings on the top and bottom lines.
In its most recent quarter Lennar saw net earnings of $137.7 million, or $0.61 per diluted share, compared to net earnings of $137.4 million, or $0.61 per diluted share. This is rather flat year over year growth, but deliveries of 4,987 homes during the quarter was up 12 percent.Revenues came in at $1.8 billion and this was up 27 percent compared to last quarter. Further, new orders of 6,183 homes were up 8 percent and the new orders dollar value were $2.0 billion which was up 21 percent. It should also be noted that the backlog of 6,858 homes was up 11 percent and the backlog dollar value of $2.4 billion was up 26 percent. What about gross margin? There was improvement here as gross margin on home sales of 25.5 percent improved 140 basis points. Further administrative expenses as a percent of revenues from home sales was 10.8 percent which improved 10 basis points. Further operating margin on home sales of 14.7 percent improved 140 basis points.