Leading homebuilder Lenner (NYSE:LEN) is scheduled to announce its results for the fourth quarter of Fiscal 2022 (ended November 30, 2022) after the market closes on Wednesday. Housing demand has been hit by high mortgage rates and fears of an economic downturn. Lennar’s Fiscal Q4 results will reflect the company’s ability to navigate through adverse market conditions.
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Analysts’ Expectations from Lennar’s Q4 results
Lennar’s Fiscal Q3 revenue increased 29% to $8.9 billion, fueled by higher home deliveries and a rise in average sales price. Adjusted earnings per share (EPS) increased 58% to $5.18. However, new orders declined 12% to 14,366 homes, reflecting the impact of challenging macro conditions.
Stuart Miller, Lennar’s executive chairman, explained that while sales have been impacted by soaring interest rates, demand remains strong due to a “significant national shortage of housing, especially workforce housing.”
Meanwhile, as per the National Association of Realtors, pending home sales in October fell 4.6% from September, marking the fifth consecutive monthly decline. High mortgage rates and stubbornly high inflation have impacted affordability and are keeping buyers on the sidelines.
As per the most recent data, the 30-year fixed mortgage rate averaged 6.33% for the week ended December 8, 2022, down from 6.49% in the prior week. However, mortgage rates still remain high. Freddie Mac’s chief economist Sam Khater noted that while mortgage rates have declined three quarters of a point over the past four weeks, home-buyer sentiment remains low.
Coming to Lennar’s fiscal Q4 upcoming results, analysts expect revenue to increase 19.5% to $10 billion and GAAP EPS to rise 25% to $4.87. Meanwhile, adjusted EPS is projected to rise over 12% to $4.90.
Is Lennar a Good Stock to Buy?
Wall Street’s Moderate Buy consensus rating for Lennar stock is based on seven Buys and three Holds. The average LEN stock price target of $97 implies over 7% upside potential. Shares have declined about 22% year-to-date.
Conclusion
High mortgage rates and inflation are impacting the housing market. Lennar’s fiscal fourth-quarter results and the company’s outlook for fiscal 2023 will give more clarity about the supply and demand dynamics in the housing market. Currently, Wall Street is cautiously optimistic about Lennar stock.
