Lennar (NYSE:LEN) stock gained more than 2% in Wednesday’s extended trade after the homebuilder’s fiscal second quarter (ended May 31, 2023) results beat analyst estimates by a wide margin. Furthermore, the company raised its Fiscal Year 2023 home delivery outlook.
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The company reported revenues of $8.05 billion, down 3.8% year-over-year, but surpassed the Street’s estimate of $7.22 billion. While home deliveries in the reported quarter rose 3.2% to 17,074 homes, LEN witnessed a 7% drop in average sales price. Also, the top line was impacted by lower Multifamily revenues and Other income.
Meanwhile, Lennar posted adjusted earnings of $2.94 per share, higher than the Street’s estimate of $2.33 per share. The reported figure compares unfavorably with $4.69 in the prior year’s quarter.
Regarding other metrics, new orders rose 0.5% to 17,885 homes, whereas the dollar value of these orders tanked 10% to $8.17 billion. Additionally, the backlog fell by 29% to 20,214 homes.
Q3 and FY23 Outlook
Lennar expects fiscal Q3 deliveries of 17,750-18,250 homes and anticipates receiving new orders of 18,000-19,000 homes. Also, the company expected a gross margin as a percentage of home sales of 23.5%-24%.
Moreover, LEN raised its home delivery target for Fiscal Year 2023, increasing it from the previously guided range of 62,000-66,000 to a new target of 68,000-70,000.
Is Lennar Stock a Good Buy?
Lennar’s performance in the fiscal second quarter was negatively impacted by ongoing challenges in the housing market caused by higher interest rates. As the Federal Reserve has decided to keep interest rates unchanged for now, demand could increase in the housing market as buyers might want to lock in the current rates.
It is worth mentioning that following the earnings release, two analysts reiterated a Hold rating on the stock while one maintained a Buy.
Currently, analysts are cautiously optimistic about LEN stock with a Moderate Buy consensus rating. This is based on nine Buy, five Hold, and one Sell recommendations. The average price target of $121.21 implies 5.6% upside potential from the current level. The stock is up 26% so far in 2023.
Investors looking for the most accurate analyst for LEN could follow Barclays analyst Matthew Bouley. Copying the analyst’s trades on this stock and holding each position for one year could result in 87% of your transactions generating a profit, with an average return of 27.77% per trade.
