Housing remains one of the most interesting aspects of the U.S. economy. Record-high housing prices and rising interest rates have pushed affordability out of reach for many. However, those with paid-off homes or mortgages locked at record-low rates have little incentive to move, keeping the existing supply very low.
Enter the opportunity for builders as demand for new housing remains resilient. That’s why many of these stocks are sitting near record highs. But can it continue? 🤔
Let’s take a look at what Lennar had to say.
The homebuilders posted second-quarter adjusted earnings per share of $2.94 on revenues of $8.05 billion. Both numbers topped the $2.32 and $7.21 billion anticipated by analysts. 💪
Improving supply chains, falling lumber prices, and other cost reductions helped push its gross margin back to 22.5%. Meanwhile, deliveries totaled 17,074 homes, and new orders of 17,885 homes ($8.2 billion) were ahead of the 16,000 management expected. Additionally, its backlog of 20,214 homes is worth roughly $9.5 billion. 🔺
Looking ahead to the third quarter, the company forecasted deliveries of 17,750 to 18,250 and a gross margin between 23.5% and 24%. Executives expect average sales prices to stay consistent QoQ, signaling further gross margin improvements from the cost side of the equation. Additionally, executives raised their full-year deliveries outlook from 62,000-66,000 to 68,000-70,000.
Overall, the company says it’s in a strong position to continue capitalizing on the demand for new homes. Its strong balance sheet has also allowed it to repurchase stock and reduce debt, allowing it to continue growing despite the macroeconomic uncertainty. 🏘️
$LEN shares rose 2% on the news, sitting just below all-time highs. 📈
