Lennar Corporation reported its net earnings fell 73% during 1Q07 as demand for new houses continued to fall in the midst of the worst housing slump since 1990. The biggest homebuilder in terms of revenue, EPS came in at just $0.43 ($68.6 million) versus a year-ago EPS figure of $1.58 ($258.1 million). In addition, CEO Stuart Miller said "Given the state of the market, we do not expect to achieve our previously stated 2007 profit goal," adding "We are not comfortable providing a new earnings goal at this time." Among the causes for the homebuilder slump are a housing inventory glut, which has not yet been worked down successfully and now, increasing foreclosures in the sub-prime mortgage market which is adding even more homes to the market. Lennar said on Jan. 17 that FY2007 earnings would at least match 2006's profit of $593.9 million, or $3.69 a share. Overall revenue dropped to $2.79 billion from $3.24 billion; revenue from home sales fell 10% to $2.62 billion. Thomson Financial analysts were expecting EPS of $0.43 on revenue of just $2.49 billion. Shares are lower by $1.49, or 3.35%, to $43.05 in pre-market action.
Sources: Bloomberg, MarketWatch, Reuters, TheStreet.com
Commentary: Is It Time to Buy the Homebuilders? 13 Stocks to Consider • Earnings Preview: Three Companies That Could Surprise This Week • New Home Sales Drop for Second Month Straight
Stocks/ETFs to watch: Lennar Corporation (NYSE:LEN). Competitors: KB Home (NYSE:KBH), D.R. Horton Inc. (NYSE:DHI), Pulte Homes Inc. (NYSE:PHM), Standard Pacific Corp. (SPF). ETFs: streetTRACKS SPDR Homebuilders ETF (NYSEARCA:XHB), iShares Dow Jones US Home Construction (NYSEARCA:ITB)
Seeking Alpha's news briefs are combined into a pre-market summary called Wall Street Breakfast. Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.