Lennar Beats Q1 Estimates, Orders and Backlogs See Staggering Growth (LEN)

Shares of home builder, Lennar Corporation (NYSE: LEN) gained on Wednesday after the company reported fiscal first-quarter results which comfortably beat Street’s estimates  as revenue soared thanks to increase in home deliveries and higher home prices in the backdrop of significantly improving housing market. Orders and backlog, two most important gauges on homebuilding sector as they indicate future business, also posted a double digit growth.

Commenting over the results, Lennar Corporation’s Chief Executive, Stuart Miller, said in a statement “Current market conditions are driven by strong demand resulting from low interest rates and attractive home prices, which have led to very affordable monthly payments, compared to increasing rental rates.”

“Supply continues to be limited by low home inventories and fewer competing homebuilders,” added Miller.

For the recently concluded quarter which ended Feb 28, the homebuilder posted net income of $57.5 million or 26 cents a share, compared to a profit of $15 million or 8 cents a share, in the year-earlier quarter.

Revenue during the period leaped 37% to $989.9 million.

Analysts’ consensus estimate was for earnings of 15 cents a share on revenue of $898 million, according to a data compiled by Thomson Reuters.  Average sales prices of home delivered rose 9.3% during the quarter to $269,000. Revenue from home sales grew by 40% to $855.1 million.

Gross margin stood at 22.1% up from 20.9% in the same quarter of last year.

While new home deliveries climbed 28% to 3,186 units, cancellation rate was 15%.

Orders climbed 34% to 4,055 homes while backlog jumped 82% to 4,922 homes.

Operating earnings, soared to $67.1 million from $20 million in the homebuilding segment, it skyrocketed 94% to $16.1 million in Lennar Financial Services Segment thanks to higher mortgage applications, and higher margins in refinancing business while it declined to $1.7 million from $9.4 million in its Rialto Investment unit mainly due to drop in interest income as portfolio of loans shrunk.