One of the leading homebuilding companies in the U.S.,
Lennar Corporation
(
LEN
), is set to unveil its second quarter fiscal 2012 results on June
27, 2012, before the start of trading. The Zacks Consensus Estimate
for the second quarter is 17 cents on revenues of $946 million.
First Quarter 2012 Recap
Lennar Corporation reported net earnings of $15.0 million or 8
cents per share in the first quarter of fiscal 2012, compared to a
loss of $10.1 million or 5 cents per share in the year-ago quarter.
Reported earnings surpassed the Zacks Consensus Estimate by 60%.
Total revenue in the quarter climbed 30% year over year to $724.9
million, on the back of a record 33% increase in orders during the
quarter, surpassing the Zacks Consensus Estimate of $698 million.
The boom in the order was due to a stable market, backed by low
home prices and low interest rates.
Agreement of Estimate Revisions
In the last 7 and 30 days, 1 each out of the 16 estimates have been
revised upwards for the second-quarter of fiscal 2012, similarly in
the last 7 days and 30 days period 1 each out of 16 estimates moved
in the opposite direction.
In the last 7 and 30 days, 1 each out of the 17 estimates have been
revised upwards for fiscal 2012, similarly in the last 7 days and
30 days period 1 each out of 17 estimates moved in the opposite
direction.
In the last 7 and 30 days, none of the 15 estimates have been
revised upwards for fiscal 2013, similarly in the last 7 days and
30 days period 2 each out of the 15 estimates were downwardly
revised.
The housing market has begun to stabilize, as buying a home has
become more reasonable than renting one, due to low home prices and
low rate of interest. This situation is expected to impact housing
operations positively in 2012.
Bullish analysts believe that the company is well positioned to
capitalize on opportunities once the housing market recovers
substantially. While some analysts believe that the market recovery
may be slow and the company will perform accordingly.
Magnitude of Estimate Revisions
Given the limited estimate revisions, the consensus estimate for
the second quarter of fiscal 2012 has remained static over the last
30 days including the last 7 days at 17 cents. However, after being
static for 30 days, the consensus earnings estimate has declined by
1 cent during the last 7 days and is at 82 cents for fiscal 2012.
Given the limited estimate revisions, the consensus estimate for
the fiscal 2013 has declined 2 cents over the last 7 days as well
as 30 days to $1.34.
Surprise History
Lennar has surpassed earnings estimates in two of the last four
quarters while meeting the consensus in one quarter and missing the
estimates in last quarter of fiscal 2011. On average, the
earnings surprise was a positive 43.04% in the trailing four
quarters.
Our Recommendation
Overall, we are encouraged by the company's impressive first
quarter results and improved profitability. We believe the company
is performing better than its peers by increasing sales prices,
reducing incentives, improving volumes and investing in
well-positioned high margin communities.
The Rialto segment is progressing well and has further growth
opportunities as the market continues to improve. However, despite
management optimism about improving home demand trends, we believe
that the overall housing recovery will be slow.
We currently have a Neutral recommendation on Lennar Corporation.
The stock carries a Zacks #3 Rank (a short-term Hold rating). One
of its peers,
Toll Brothers, Inc.
(
TOL
) presently retains a Zacks #1 Rank, which translates into a
short-term Strong Buy rating.
LENNAR CORP -A (LEN): Free Stock Analysis
Report
TOLL BROTHERS (TOL): Free Stock Analysis Report
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