) beat the Zacks Consensus Estimate on both earnings and revenues
for the fourth quarter 2013 on the back of the housing market
recovery which continued to boost both volume and prices for this
leading national homebuilder despite recent concerns among
investors about rising interest rates.
LENNAR CORP -A (LEN): Free Stock Analysis
M/I HOMES INC (MHO): Free Stock Analysis
MERITAGE HOMES (MTH): Free Stock Analysis
TOLL BROTHERS (TOL): Free Stock Analysis
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Lennar's fourth-quarter fiscal 2013 earnings of 73 cents per
share beat the Zacks Consensus Estimate of 64 cents by 14.1%.
Earnings jumped 30.4% from 56 cents earned in the prior-year
quarter. Double-digit growth in homebuilding revenues and solid
margins aided the earnings growth.
The fourth quarter 2013 earnings included $94.0 million in tax
provision, whereas fourth quarter 2012 earnings included $18.6
million in tax benefit.
Total revenue grew 41.8% year over year to $1.92 billion as both
Homebuilding and Rialto Investments segments did significantly
well in the quarter. Revenues also beat the Zacks Consensus
Estimate of $1.87 billion by 53.5%.
Homebuilding revenues increased 47.9% year over year to $1.76
billion. Home sales were $1.73 billion in the quarter, up 50.4%
year over year driven by both pricing and volume growth in a
solid housing market. Home closings, new orders and backlog were
all up in double-digits from the year-ago period.
New home orders increased 13% to 4,498 homes in the fourth
quarter on increased demand. The potential value of the net order
increased 34% year over year to $1.4 billion.
New home deliveries, excluding unconsolidated entities, were up
27% year over year to 5,650 homes in the reported quarter. The
increase was driven by demand growth in all the Homebuilding
segments. The average selling price (ASP) of homes delivered was
$307,000, up 17.6% year over year.
The backlog grew 19% year over year in the quarter to 4,806
homes. Potential housing revenues from the backlog rose 40% year
over year to $1.6 billion. The company reduced sales incentives
during the quarter. Sales incentives comprised 6.3% of home sales
revenues in the fourth quarter, lower than 9.0% in the prior-year
quarter and higher than 6.0% in the third quarter of 2013.
Gross margin on home sales expanded 330 basis points (bps) to
26.8% on the back of a rise in ASP, favorable product mix
(increased deliveries from higher margin communities) and reduced
incentives which offset headwinds from rising labor, land and
As a percentage of sales, however, SG&A improved 140 bps to
9.9%, driven by better operating leverage as volumes improved and
absorption per community increased. Operating margin on home
sales improved 470 bps to 16.9%, buoyed by higher gross margin
and SG&A ratio.
Financial Services segment's revenues declined 17.6% to $99.7
million in the quarter. The operating earnings of Financial
Services were $17.0 million, down from $33.2 million from the
prior-year quarter. The decline in profit was primarily due to
lower volumes and profit per transaction following a decline in
refinance volume in the mortgage operations.
Rialto Investments' revenues increased 63.6% year over year to
$58.9 million in the quarter, owing to the commencement of Rialto
Mortgage Finance Business. Operating earnings increased year over
year to $13.9 million from $4.6 million in the prior-year quarter
on higher revenues.
Lennar Multifamily revenues increased to $1.50 million in the
reported quarter from $247 thousands from the prior- year
Revenue increased 45% year over year to $5.9 billion for fiscal
2013, due to double-digit growth in number of home closed and net
The company is positive about fiscal 2014 on the back of
increasing demand with continued housing recovery, solid backlog
position, rising home prices, strong liquidity position and its
strategic land acquisitions.
Another homebuilding company
Toll Brothers, Inc.
) reported its fourth quarter earnings on Dec 10, 2013. The
company surpassed both revenue and earnings estimates in the
fourth quarter of fiscal 2013 attributable to aggressive pricing
and increased number of homes delivered, both of which exceeded
the company's guided range by a wide margin.
Lennar carries a Zacks Rank #3 (Hold). Better-ranked homebuilding
Meritage Homes Corp.
M/I Homes, Inc.
). Both the companies carry a Zacks Rank #2 (Buy).