Shares of Lennar Corp. (NYSE:LEN) are tanking today, despite the homebuilder delivering a better-than-anticipated performance for the fourth quarter. Its EPS of $4.82 outpaced expectations by $0.23. Further, revenue increased by 7.9% year-over-year to $10.97 billion, exceeding estimates by $970 million.
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During the quarter, new orders jumped by 32% to 17,366 homes, and deliveries increased by 19% to 23,795 homes. The total backlog at the end of the quarter stood at 14,892 homes. Further, the company’s net margin on home sales came in at a healthy 17.6%.
The quarter was marked by elevated interest rates and a supply/demand imbalance. While supply shortages continue, the anticipated rate hikes over the coming periods should prove favorable for the company.
On another note, Lennar has been fortifying its balance sheet. The company pared down debt by $488 million and had no borrowings under its revolving credit facility. At the end of the quarter, it had a cash pile of $6.3 billion and a record-low homebuilding debt-to-capital ratio of 9.6%. During the year, Lennar repurchased 10 million shares for $1.1 billion.
For the upcoming quarter, Lennar anticipates new home orders in the range of 17,500 to 18,000. The company expects to deliver 16,500 to 17,000 homes in Q1 and 80,000 homes for Fiscal Year 2024. The average unit sales price in Q1 is anticipated at $420,000. However, the company refrained from providing margin expectations for the full year.
Is LEN a Good Stock to Buy?
Overall, the Street has a Moderate Buy consensus rating on Lennar. Following a nearly 70% rally in the company’s share price over the past year, the average LEN price target of $141.07 implies downside potential of 8.9% in the stock.
