Why Is Lennar (LEN) Up 8.2% Since Last Earnings Report?

It has been about a month since the last earnings report for Lennar (LEN). Shares have added about 8.2% in that time frame, outperforming the S&P 500.

But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Lennar due for a pullback? Well, first let's take a quick look at its latest earnings report in order to get a better handle on the recent drivers for Lennar Corporation before we dive into how investors and analysts have reacted as of late.

Lennar Q4 Earnings Miss Estimates, Revenues Beat

Lennar reported mixed results for the fourth quarter of fiscal 2025, wherein its adjusted earnings missed the Zacks Consensus Estimate, while total revenues beat the same. Meanwhile, both metrics tumbled on a year-over-year basis. 
 
The quarter’s performance was hurt by a still-challenging housing market, as affordability issues and buyer uncertainty kept demand weak. A six-week government shutdown and softer market conditions added further pressure. In response, the company remained focused on maintaining volumes, adapting to evolving conditions, reducing costs and supporting long-term housing demand rather than reacting to short-term volatility.

While interest rates declined modestly in the fourth quarter, the broader market environment remained difficult. Lower rates are expected to help the market stabilize as Lennar increases volumes. Over the long term, the company remains confident in housing demand and is focused on affordability, consistent production and cost discipline.

LEN’s Quarterly Numbers

Lennar’s fourth-quarter adjusted earnings per share (EPS) (excluding mark-to-market gains on technology investments) of $2.03 missed the Zacks Consensus Estimate of $2.23 by 9%. In the year-ago quarter, the company reported an adjusted EPS of $4.03.

Total revenues of $9.37 billion surpassed the consensus mark of $9.13 billion by 2.7% but declined 5.8% year over year from $9.95 billion.

Q4 Segment Details of Lennar

Homebuilding: This segment’s revenues totaled $8.89 billion, down 6.9% from the prior-year quarter. Under the Homebuilding umbrella, home sales contributed $8.85 billion to total revenues, down 6.8% from a year ago. Nonetheless, land sales accounted for $21.2 million, down from $39.6 million in the prior-year quarter. The Other homebuilding unit contributed $9.2 million to homebuilding revenues, up from $8.1 million a year ago.

Home deliveries increased 3.7% to 23,034 units from 22,206 units in the prior-year quarter.  The ASP of homes delivered was $386,000, down 10.2% from the year-ago figure due to continued weakness in the market and an increased use of sales incentives offered to homebuyers. 

New orders increased 18.5% from the year-ago quarter to 20,018 homes. The potential value of net orders also rose year over year to $7.51 billion from $7.18 billion.

The backlog at the fiscal fourth-quarter end was 13,936 homes, up from 11,633 homes in the year-ago quarter. However, potential housing revenues from backlog decreased year over year to $5.24 billion from $5.37 billion.

The gross margin on home sales was 17% for the quarter, down 510 basis points (bps) year over year. The decline was mainly due to decreased revenue per square foot and increased land costs year over year. This was partially offset by a decline in construction costs as LEN continued to focus on construction cost savings.

SG&A expenses, as a percentage of home sales, increased 70 bps to 7.9% due to less leverage as a result of lower revenues and higher marketing and selling expenses.

Financial Services: The segment’s revenues grew 1.4% year over year to $308.8 million from $304.6 million. However, operating earnings for the quarter decreased to $133.8 million from $154.5 million a year ago.

Lennar Multi-Family: Revenues of $158.7 million in the segment were significantly up 78.4% from the prior-year quarter. The segment reported an operating loss of $44.2 million for the quarter compared with a $160 million loss in the prior-year period.

Lennar Other: The segment’s revenues totaled $14.8 million, up from $4.7 million a year ago. Its operating earnings were $60.6 million compared with $0.45 million a year ago.

FY25 Highlights

Lennar’s total revenues during fiscal 2025 were $34.2 billion, down from $35.4 billion reported in fiscal 2024. Homebuilding revenues decreased to $32.27 billion from $33.91 billion reported a year ago.

Adjusted EPS (excluding mark-to-market gains and other one-time items) of $8.06 was down year over year from $13.86 reported last year.

Lennar’s Financials

At the fiscal fourth-quarter end, Lennar had homebuilding cash and cash equivalents of $3.44 billion, down from $4.66 billion at the end of fiscal 2024. The company had no outstanding borrowings under the $3.1 billion revolving credit facility.

The total homebuilding debt was $4.08 billion as of the fiscal fourth-quarter end, up from $2.26 billion at the fiscal 2024 end. Homebuilding debt to capital was 15.7%, up from 7.5% at the fiscal 2024-end.

In November, LEN completed a non-cash Millrose exchange, swapping 33.3 million Millrose Class A shares (20% ownership) for 8 million Lennar Class A shares. The transaction resulted in a $1.1 billion reduction in investments and stockholders’ equity and a one-time loss of $156 million.

Lennar Unveils Q1 FY26 Guidance

For the first quarter of fiscal 2026, the company expects deliveries to be in the range of 17,000-18,000 homes compared with 17,834 homes delivered in the year-ago period. LEN expects the ASP of the delivered homes to be in the range of $365,000-$375,000, down from $408,000 reported a year ago.

The gross margin on home sales is expected to be in the range of 15-16%, down from 18.7% reported a year ago. SG&A expenses, as a percentage of home sales, are likely to be about 9.5%, up year over year from 8.5%.

New orders are likely to be within 18,000-19,000 units compared with 18,355 homes reported a year ago.

Financial Services operating earnings are expected to be between $105 million and $110 million, down from $143 million reported a year ago.

How Have Estimates Been Moving Since Then?

Since the earnings release, investors have witnessed a downward trend in estimates review.

The consensus estimate has shifted -45.47% due to these changes.

VGM Scores

At this time, Lennar has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Following the exact same course, the stock was allocated a score of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Lennar has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.

Performance of an Industry Player

Lennar belongs to the Zacks Building Products - Home Builders industry. Another stock from the same industry, Toll Brothers (TOL), has gained 4.1% over the past month. More than a month has passed since the company reported results for the quarter ended October 2025.

Toll Brothers reported revenues of $3.42 billion in the last reported quarter, representing a year-over-year change of +2.7%. EPS of $4.58 for the same period compares with $4.63 a year ago.

For the current quarter, Toll Brothers is expected to post earnings of $2.06 per share, indicating a change of +17.7% from the year-ago quarter. The Zacks Consensus Estimate has changed +2.6% over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #5 (Strong Sell) for Toll Brothers. Also, the stock has a VGM Score of A.

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This article originally published on Zacks Investment Research (zacks.com).

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