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Lennar Corp (NYSE: LEN) is trading down in extended hours on Wednesday after reporting lower-than-expected revenue for its first financial quarter.

Lennar’s guidance for its fiscal second quarter

Investors are concerned because the guidance did not particularly impress either. $LEN now expects to deliver up to 19,500 homes in the second quarter.

New orders, it added, will fall between 20,900 and 21,300 in Q2. Stuart Miller – the co-chief executive of Lennar Corp said in a press release today:

 

We remain focused on our “land strategies” initiatives to intensify our land light focus and assure consistency of execution now and in future as we embrace an ever-more focused manufacturing model for Lennar.

The homebuilder expects average sales price to be around $422,500 in the second quarter helping gross margin on home sales to come in at 22.5%. Lennar stock that currently pays a dividend yield of 1.21% is up close to 60% at writing versus its low in late October.

Notable figures in Lennar’s Q1 earnings release

• Earned $719 million versus the year-ago $599 million
• Per-share earnings also improved from $2.06 to $2.57
• Repurchased 3.4 million shares in total in Q1
• Total revenue jumped 13% year-over-year to $7.3 billion
• Consensus was $2.22 a share on $7.41 billion in revenue
• Delivered 16,798 homes – up 23% versus last year

Lennar received 18,176 new orders for homes – up 28% and ended its first quarter with a backlog of 16,270 homes, as per the earnings report. Co-CEO Miller also said on Wednesday:

Housing market fundamentals remained strong as demand continued to outweigh supply. These conditions remained constructive for our overall operating strategy of focusing on production and sales pace over price while growing market share.

In January, $LEN raised its dividend and authorised another $5.0 billion worth of share repurchase. Wall Street currently has a consensus “overweight” rating on the home construction company.

🟥WARNING🟥

To settle a mortgage currently requires the equivalent of 15 years’ worth of annual salaries, while the historical norm is approximately 9 years.

The housing market is overvalued by 66%. pic.twitter.com/wswKSwGOxo

— HZ (@MFHoz) March 10, 2024

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