:max_bytes(150000):strip_icc()/GettyImages-1359235761-b4c4a0d67907446b85138b1f0cc40dbb.jpg "Lennar Stock Drops as Investors Don’t Like the Homebuilder’s Latest Outlook")
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Key Takeaways
- Lennar Corporation beat expectations on the top and bottom lines with its fiscal third-quarter results.
- The homebuilder guided investors toward no quarter-over-quarter growth for its gross margin on home sales.
- The stock, which rose Thursday following the Fed’s rate cut, gave back some of those gains today.
Lennar (LEN) shares dropped Friday despite stronger-than-expected quarterly results as the homebuilder’s guidance left investors uninspired.
The company said it expects its fiscal fourth-quarter gross margin on home sales to hold flat quarter-over-quarter at 22.5%, below the analyst consensus from Visible Alpha. It expects between 19,000 and 19,300 new home orders and an average sales price of $425,000, in line with Street estimates.
Lennar beat expectations for the third quarter ended August 31, posting revenue that grew 9% year-over-year to $9.4 billion. Earnings per diluted share rose $4.26, while new orders improved 5%.
CEO Stuart Miller pointed to an improving environment for homebuilders. Several homebuilder shares rose Thursday, climbing following the Federal Reserve’s decision to cut rates, which is expected to lead to lower mortgage rates.
“We are pleased to report another solid quarter backed by an economic environment that remains very constructive for homebuilders,” Miller said. “Employment was strong, housing supply remained chronically short due to production deficits of over a decade, and demand was solid driven by strong household formation.”
Shares of Lennar dropped 4% in recent Friday trading. KB Home (KBH), which reports earnings on Tuesday, saw shares slide more than 1%, compared to a 0.2% decline in the S&P 500.