Need Help?  

1-888-998-3548

Lennar (LEN) Gives Back Pre-Market Gains Despite Strong Earnings Report

Charlie Sumner and John Darsie
Jun 25, 2013, 1:09 PM

Lennar Corp. (NYSE: LEN): The home building firm reported second-quarter results this morning before the open that beat analyst estimates on both the top and bottom lines. Shares rose pre-market by 3.46% in response to the strong report. The housing recovery boosted both volume and prices for LEN despite investors' recent worries concerning rising interest rates. A double-digit growth in home building revenues and solid margins helped boost the company's earnings growth for this quarter.

 

EPS Results

 

Adjusted Actual $0.43  vs. Expected $0.33

Grew 104.7 % year-over-year

 

 

Revenue Results

 

Actual $1.43 B vs. Expected $1.33 B

Grew 53.0% year-over-year

 

 

Guidance

 

EPS Q1 2014: Actual $0.52  vs. Expected $0.51  (-1.93%)

Earnings per share in the current fiscal year: Actual $1.67  vs. $1.67 (Unchanged)

 


Key Takeaways from Conference Call

 

CEO Stuart Miller: “During the second quarter, our gross margin percentage on home sales improved to 24.1%, while our S, G&A % of home sales came in under 11% for the first time since our third quarter of 2006. Our operating leverage should continue to improve, driven by our higher new orders . During the quarter, our El Toro joint venture, which is managed by FivePoint Communities, contributed $13.0 million of earnings to our bottom line. Meanwhile, our financial services business generated $29.2 million of earnings during the quarter, as the refinance business continued its strong performance.”

 

 

Taking a Look at the Chart

 

Pattern: Breaking multi-year uptrend

 

The Homebuilders had been one of the leading sectors in the market over the past two years, and Lennar (LEN) played an instrumental role in that. However, since hitting a 52-week high of $43.79 back on May 24, the stock has been in a steady downtrend as the Homebuilders have done a 180 and become one of the weakest sectors in the market during this correction. LEN shares jumped 3.46% pre-market, but have given back all of those gains during the session.

 

LEN broke its multi-year uptrend during the pull-back over the last few weeks. Today's gap up gave bulls some hope that it could retest the broken trendline, but the fact that LEN couldn't hold pre-market gains is a troubling sign for the sector. Based on the recent technical action, the Homebuilders could continue to underperform the market for the foreseeable future.

 

 

 

 

Potential Sympathy Trades – Stocks in the Same Sector

Taylor Morrison Home Corp. (NYSE:TMHC)

KB Home (NYSE:KBH)

Comstock Holding Companies, Inc. (NASDAQ:CHCI)

Standard Pacific Corp. (NYSE:SPF)

Last Updated ( Tuesday, 25 June 2013 13:51 )
Banner
© 2012 T3 Live, LLC
  1. T3 LIVE, LLC is NOT a Broker Dealer. T3 LIVE, LLC engages in trader education and training. T3 LIVE, LLC offers a number of products and services, both electronically (over the internet through T3LIVE.com) and in person. Through T3 TV, an online video network that is available through T3LIVE.com, T3 LIVE, LLC provides LIVE pre/post market and stock analysis. Through T3LIVE.com, T3 LIVE, LLC offers the "Virtual Trading Floor", a community through which independent traders (subscribers), as well as select T3 Trading Group, LLC Traders, observe a virtual trading floor environment (as described below) for educational purposes. T3 LIVE, LLC also offers web-based, interactive training courses on demand.
  2. Subscribers are able to see if traders are long or short and what symbols as part of best practices in regards to disclosure. Subscribers do not see trader' screens, trades or size of positions. T3 requires traders to disclose whether they are long or short and which stocks they are trading to ensure that the community is fully informed and that traders substantiate their opinions. This approach is modeled after the analyst disclosures that accompany commentary on particular stocks on CNBC or other financial news media (as per FINRA Rules 2210 and 2711).
  3. The seminars given by T3 LIVE, LLC are for educational purposes only. This information neither is, nor should be construed, as an offer, or a solicitation of an offer, to buy or sell securities. You shall be fully responsible for any investment decisions you make, and such decisions will be based solely on your evaluation of your financial circumstances, investment objectives, risk tolerance, and liquidity needs.
  4. This material is being provided to you for educational purposes only. No information presented constitutes a recommendation by T3 LIVE, LLC or its affiliates to buy, sell or hold any security, financial product or instrument discussed therein or to engage in any specific investment strategy. The content neither is, nor should be construed as, an offer, or a solicitation of an offer, to buy, sell, or hold any securities. You are fully responsible for any investment decisions you make. Such decisions should be based solely on your evaluation of your financial circumstances, investment objectives, risk tolerance and liquidity needs.
  5. The videos and blogs shown on T3 LIVE, LLC are for informational purposes only. The investment ideas and expressions of opinion may contain forward looking statements and should not be viewed as recommendations, personal investment advice or considered an offer to buy or sell securities. T3 LIVE, LLC statements and opinions are subject to change without notice and should be considered only as part of a diversified portfolio.
  6. T3 LIVE, LLC and T3 Trading Group, LLC are separate, but affiliated companies.
  7. T3 Trading Group, LLC is a Registered SEC Broker-Dealer and Member of the CBOE Stock Exchange (CBSX www.CBOE.com). All trading conducted by contributors on Virtual Trading Floor is done through T3 Trading Group, LLC. For more information on T3 Trading Group, LLC please visit www.T3Trading.com.
  8. Global Trading Plus, LP (“GTP”) is the exclusive provider of T3 LIVE, LLC products in Europe, all the former Soviet Republics (dating back to 1991), and Israel. GTP is a separate company and has no common ownership with T3 LIVE, LLC, T3 Trading Group, LLC.