Lennar Q3 revenue misses analyst estimates amid market weakness

Overview

• U.S. homebuilder's Q3 revenue fell and missed analyst expectations

• Adjusted EPS for Q3 declined year-over-year amid higher mortgage rates and affordability constraints

• Company repurchased 3 mln shares for $256 mln during the quarter

Outlook

• Lennar expects Q4 new orders of 19,500 to 20,500 homes

• Company sees Q4 deliveries of 22,000 to 23,000 homes with gross margin of 15.5% to 16.0%

• Lennar lowers 2026 full-year delivery target to 80,000 to 81,000 homes from 82,000 to 83,000

Result Drivers

• HIGHER MORTGAGE RATES - Co said increased rates and affordability constraints led consumers to slow purchase decisions, reducing new orders and deliveries

• LOWER HOME SALES PRICES - Co attributed decrease in average sales price to continued market weakness

• DECLINING GROSS MARGINS - Co said gross margins fell due to lower revenue per square foot and higher land costs, partially offset by reduced construction costs from cost-saving initiatives

Company press release:

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "hold" and the breakdown of recommendations is 2 "strong buy" or "buy", 9 "hold" and 9 "sell" or "strong sell"

• The average consensus recommendation for the homebuilding peer group is "buy."

• Wall Street's median 12-month price target for Lennar Corporation is $85.00, about 6.2% above its September 15 closing price of $80.07

• The stock recently traded at 13 times the next 12-month earnings vs. a P/E of 13 three months ago

Reuters Recommended Reads

• Sept 16 - UK's Barratt Redrow FY revenue rises; cuts annual home completions target

• Sept 15 - UK's MJ Gleeson FY revenue beats on partnerships strategy

• Sept 16 - US homebuilder sentiment drops to 12-month low in September

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