UPDATE 3-U.S. housing recovery drives Lennar profit

Tue Jan 15, 2013 9:58am EST

* Q4 EPS $0.56 vs. $0.16 a year earlier

* New orders jump 32 percent

* Lennar well positioned to gain market share in 2013 - CEO (Adds details, share movement, analyst comment)

Jan 15 (Reuters) - Lennar Corp, the No. 3 U.S. homebuilder, reported a sharp rise in quarterly profit and a seventh straight jump in new home orders, in further evidence that a housing recovery is well on track.

Shares of the company, however, fell 2 percent in early trading on concerns that the growth in orders was slowing and that part of the gain in profit had come from a one-time reversal of a deferred tax valuation allowance.

"Low mortgage rates, affordable home prices, reduced foreclosures and an extremely favorable 'rent vs. own' comparison continue to drive the recovery," Chief Executive Stuart Miller said in a statement.

The U.S. housing market, which fell into a deep rut six years ago, has been recovering as low interest rates and rising rents are prompting consumers to buy homes.

Home sales and prices are rising, encouraging builders to undertake new construction projects. Single-family home prices rose in October for nine months in a row, recent data show.

CEO Miller said Lennar was "extremely well positioned" to gain market share in 2013 and that the company expects to be strongly profitable.

Lennar delivered 4,443 homes, up 32 percent, in the fourth quarter, while the average selling price of the homes delivered rose 7 percent to $261,000.

Miami-based Lennar's operating margin on home sales was 12.2 percent, up 660 basis points, due to an increase in selling prices and fewer buyer incentives.

Orders rose 32 percent to 3,983 homes, while its backlog at the end of the quarter was worth $1.2 billion.

However, order growth fell short of the third quarter when they grew 44 percent from low 2011 levels.

"We expect a slightly negative reaction for the stock today," JP Morgan analysts wrote in a note, citing high investor expectations heading into the earnings report.

TAX BENEFIT

Net income rose to $124.3 million, or 56 cents per share, in the fourth quarter, from $30.3 million, or 16 cents per share, a year earlier.

Revenue rose 42 percent to $1.3 billion.

Analysts were expecting earnings of 44 cents per share on revenue of $1.31 billion, according to Thomson Reuters I/B/E/S.

Profit included a tax benefit from the reversal of a $44.5 million valuation allowance related to deferred tax assets.

Lennar's stock, which doubled in value in 2012 and is trading at levels last seen in 2007, was down at $40.10 on the New York Stock Exchange on Tuesday morning. (Reporting by A. Ananthalakshmi in Bangalore; Editing by Supriya Kurane)

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