Lennar Stock Falls After-Hours On Soft Q3, But Retail Traders Turn Optimistic Following Fed Rate Cut

Lennar Corp shares fell 3% in extended trading Thursday after the U.S. homebuilder posted weak quarterly results, underscoring ongoing pressure in the housing market.

Investors are awaiting further details on the company's analyst call scheduled for 11 am ET on Friday, even as retail traders took an optimistic view given the recent rate cut.

Lennar's net profit declined to $591 million in its fiscal third quarter, down from $1.16 billion a year ago, marking a fourth consecutive quarter of decline. On an adjusted basis, the $2 per share profit was just below analysts' expectations of $2.1.

The company's home deliveries ticked up marginally, but the average sales price fell to $383,000 from $422,000. Consequently, gross margins fell to 18% from 23% in the year-ago quarter.

Total revenue declined 6.5% to $8.8 billion, missing expectations of $9 billion.

The housing market has been under significant strain over the past year, as high inflation and economic uncertainty kept many buyers on the sidelines. To sustain sales, homebuilders have leaned on steep discounts and promotional offers. However, with this week's interest rate cut, which should ease mortgage costs, analysts anticipate a potential revival in housing demand.

The iShares US Home Construction ETF (ITB), which tracks stocks of homebuilders, has risen over 30% since a recent low on Aug. 8, as rate cut expectations began to build up. Gains in Lennar's shares mirror the trend.

On Stocktwits, retail-trader sentiment for LEN shifted to 'extremely bullish' after the company's results, from 'bullish’ a day ago.

"Interest rates remained elevated throughout the third quarter, but then declined towards the quarter's end. This downward trend, paired with the Fed's recent rate cut, gives us optimism as we head into the fourth quarter," Lennar's Co-CEO Stuart Miller said in a statement.

For the current quarter, the company is guiding for deliveries of 22,000 to 23,000 units, with an average price of $380,000 to $390,000, and a gross margin of approximately 18%. Analysts expected 22,557 deliveries.

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