* Second-quarter revenue $1.43 bln vs est $1.33 bln
* Earnings $0.61 per share vs est $0.33
* Orders rise 27 pct, backlog rises 55 pct
* Shares rise as much as 6 pct
By Sagarika Jaisinghani
June 25 Lennar Corp reported a 27
percent rise in orders in the critical spring selling season as
its large land bank helped it take advantage of a recovering
U.S. housing market.
The No. 3 U.S. homebuilder's better-than-expected
second-quarter results also allayed investor fears that rising
mortgage rates would dampen housing demand.
"... The housing recovery is still very much intact and the
fundamentals of that recovery remain solid," Chief Executive
Stuart Miller said on a post-earnings conference call.
Lennar's results come on the back of strong May data,
pointing to a solid housing market recovery.
The company's orders jumped to 5,705 homes in the spring
selling season, which is to homebuilders what the Christmas
shopping season is to retailers. Lennar booked orders for 4,481
homes in the year-ago spring quarter.
Supply of new single-family homes has been constrained as
many builders cut back on buying land through the economic
downturn. Builders have also complained of labor shortage, which
has further slowed construction.
Lennar is better positioned than many of its peers to
continue building houses as it got back into the game early and
actively bought land over the past several years.
Goldman Sachs wrote in an industry note on Monday that it
expects Lennar to grow faster than the national average given
the company's solid land investments.
The builder, which sells homes ranging from urban infill
communities to golf course communities, said on Tuesday that it
had enough land to meet sales through 2014. It expects to spend
about $2 billion per year on new land acquisitions from 2015.
"(Lennar's) land bank is quality land, it is adequate to
meet the demand that's out there," Williams Financial Group
analyst David Williams said.
U.S. homebuilder sentiment turned positive in June for the
first time since the start of the housing crisis, data from the
National Association of Home Builders showed.
Lennar's shares have gained almost 170 percent since the
housing market started recovering in October 2011 and have
outperformed the Dow Jones Home Construction Index.
The stock trades at about 17 times its forward 12-month
earnings SmartEstimate, according to Thomson Reuters StarMine
data. Smaller peer KB Home's shares trade at nearly 24
Lennar shares were up 1 percent at $35.34 on Tuesday
afternoon on the New York Stock Exchange.
Lennar said its average selling price rose 13 percent to
$283,000 for the three months ended May.
"Affordability remains high, and despite recent interest
rate increases, we have seen very little impact on sales or
pricing," Miller said.
However, Williams Financial Group's David Williams said it
was too early to estimate the impact of mortgage rate increases.
Interest rates started rising towards the end of May after
being held at record lows by the U.S. Federal Reserve.
Lennar's backlog - houses ordered but not yet finished -
rose 55 percent to 6,163 in units and 76 percent to $1.9 billion
The company earned 61 cents per share on revenue of $1.43
billion for the second quarter. Analysts on average had expected
earnings of 33 cents per share on revenue of $1.33 billion,
according to Thomson Reuters I/B/E/S.
Lennar, the first of the top 5 U.S. homebuilders to report
quarterly results, said in January it would enter the apartment
rental business to take advantage of rising rents.
CEO Miller said on Tuesday that construction had begun on
five apartment communities, totaling about 1,500 apartments.