Feb. 6, 2014, 8:16 AM
- Lennar (LEN) +2.3% premarket after Goldman Sachs upgrades shares to Conviction Buy from Neutral with a $48 price target, from $38.
- Goldman thinks the market is valuing LEN almost exclusively for its core homebuilder business, while ascribing little value to its ancillary businesses; the firm's deep dive on FivePoint communities, Rialto and Multifamily drives its 2014-15 EPS estimates a respective 2% and 9% above consensus.
- The firm expects new home sales growth to accelerate to 20% by Q4 2014 from 5% in Q1.
- ETFs: XHB, ITB.
Jan. 31, 2014, 11:49 AM
- The homebuilders continue a big move higher this week as the sector reports better-than-expected results from Q4, and now has the tailwind of lower rates behind it. Off four basis points to 2.66% today, the 10-year Treasury yield has tumbled about 35 basis points in January.
- A couple of upgrades has Jefferson Research raising D.R. Horton (DHI +3.5%) to a Buy and RayJay upping Pulte Group (PHM +4.5%) to Outperform.
- ETFs; XHB +1.4%, ITB +2.3%
- Toll Brothers (TOL +3%), NVR (NVR +3.6%), William Lyons (WLH +1.1%), Hovnanian (HOV +2.2%), Lennar (LEN +3.4%)
- The New Home Company (NWHM) is up 10% from last night's IPO price of $11, but the pricing range had been expected at $15-$17 per share.
Jan. 28, 2014, 10:15 AM
- The homebuilders have their tails in their air following D.R. Horton's big earnings results which showed reports about the end of the housing recovery may be premature (DHI +8.5%). The company reported average sales price gains of 10%, orders by value up 14%, and the value of properties under contract up 20%.
- "Our weekly sales pace has accelerated in January," says Chairman Don Horton.
- XHB +1.6%, ITB +3%
- Toll Brothers (TOL +3.2%), Lennar (LEN +4.3%), KB Home (KBH +3.8%), Hovnanian (HOV +3.3%), Ryland (RYL +3.2%), Standard Pacific (SPF +3.2%), Comstock (CHCI +3.9%), Pulte (PHM +2.7%), NVR (NVR +1.4%), M.D.C. Holdings (MDC +3.6%), Taylor Morrison (TMHC +4.2%)
Jan. 24, 2014, 8:05 AM
- "Longer-term we believe builders have upside, but now offer only moderate risk-adjusted upside if 2014 meets expectations, with greater downside potential amid rising rates or lower than expected growth," says analyst Kenneth Zener, throwing in the towel on Buy ratings for D.R. Horton (DHI) and MDC Holdings.
- The stocks trade at about 2x adjusted book value, says Zener, and builders only traded above that level for 16% of the time since 1978.
- His team maintains Buy ratings on Toll Bros. (TOL) and Lennar (LEN) despite the aging of the"spring" trade, but based on long-term growth prospects and their longer land positions.
Jan. 17, 2014, 9:49 AM
- December housing starts of 999K fell 9.8% from November, but are up 1.6% from a year ago. SIngle family starts of 667K fell 7% from last month. For the full year, an estimated 923.4K housing units were started, up 18.2% from 2012.
- Building permits of 986K declined 3% M/M, rose 4.6% Y/Y. For the full year, an estimated 974K units were authorized, up 17.5% from 2012.
- Full report
- XHB -0.75%, ITB -0.8%.
- Builders: Toll Bros. (TOL -1.1%), Lennar (LEN -1.6%), Hovnanian (HOV -1.1%), Ryland (RYL -1.6%), D.R. Horton (DHI -1.1%), Pulte (PHM -1.4%), KB Home (KBH -0.9%).
Jan. 15, 2014, 4:47 PM
Dec. 23, 2013, 2:22 PM
- Homebuilders and private mortgage insurers are partying thanks to incoming FHFA chief Mel Watts' weekend move to postpone an increase in fees which would have raised significantly raised mortgage costs for those with good, but not stellar credit and less than 20% to put down.
- "This is a victory for the housing finance industry," says FBR's Edward Mills. "We believe that this is the first of a series of decisions by incoming Director Watt to preserve/expand mortgage credit availability ... We view this announcement as positive for housing generally, but specifically for private mortgage insurers, originators, and homebuilders."
- Homebuilder ETFs: XHB +2%, ITB +2.8%.
- Homebuilder names: Toll Brothers (TOL +3.9%), Putle (PHM +5%), Lennar (LEN +3.2%), KB Home (KBH +6.9%), Hovnanian (HOV +4.8%), D.R. Horton (DHI +2.8%), Standard Pacific (SPF +4%).
- Mortgage insurers: Radian (RDN +4.1%), MGIC (MTG +1.1%), Genworth (GNW +1.6%), Old Republic (ORI +0.7%), NMI Holdings (NMIH +1.1%). Essent Group (ESNT -0.6%) is off a hair, but up 29% since its late-October IPO.
- Not showing much reaction today, but potentially set up to disappoint if the GSEs do not allow any private oxygen in mortgage finance are Redwood Trust (RWT -0.2%) and PennyMac Financial (PFSI +1.2%).
Dec. 18, 2013, 7:12 AM
- Lennar (LEN) Net profit +32% to $164.1M, including a $94M tax provision.
- Deliveries of homes +27% to 5,650.
- New orders +13% to 4,498; in dollar terms, +34% to $1.4B.
- However, "the political and interest rate environment, and our previously initiated price increases tempered new sales orders," says Lennar CEO Stuart Miller.
- Backlog +19% to 4,806 homes, or +40% to $1.6B.
- Gross margin on home sales 26.8%, up 330 bps.
- Operating margin on home sales 16.9%, +470 bps.
- "We begin 2014 with a strong balance sheet and a clearly defined strategy," says Miller. "We are extremely well positioned across all of our platforms to continue to grow profitably our operations and capitalize on the opportunities of a recovering housing market and economy."
- Shares +4.8%. (Previous) (PR)
Dec. 18, 2013, 6:02 AM
Dec. 18, 2013, 12:05 AM
Dec. 17, 2013, 5:30 PM
Dec. 11, 2013, 2:59 PM
- The two worst-performing sectors on a down day are industrials (XLI -1.4%) and homebuilders (XHB -1.5%), (ITB -1.9%).
- Industrials are taking a hit after Joy Global (JOY -6.3%) missed earnings estimates and provided disappointing guidance. "With a limited number of projects that can book in time to help 2014, we continue to see both the need and opportunity to lower the cost base in our business," says the company. Caterpillar (CAT -1.2%).
- Homebuilders continue to digest Toll Brothers' (TOL -1.8%) "leveling in demand" comments from yesterday's earnings results - in the 19 weeks since August 1, business has been flat vs. last year, and in the first 5 weeks of FQ1 (beginning Nov. 1) business has also been flat from 2012 (though Hurricane Sandy makes a tricky comparison).
- CEO Doug Yearley on the earnings call (transcript): "There's just not a lot of action [this time of year]. We still feel like pent-up demand is building, demographics are on our side, affordability is in place, and we are cautiously optimistic about the spring season, which begins the end of January."
- Lennar (LEN -2.3%), D. R. Horton (DHI -3%), KB Home (KBH -3.1%), Hovnanian (HOV -3.3%)
Dec. 3, 2013, 4:44 PM
- "While collecting the award is doubtful, the true value of the verdict is the validation of our integrity, credibility and transparency, which have always been cornerstones of our foundation," says Lennar's (LEN, LEN.B) CEO, Stuart Miller.
- Lennar had sued California developer Nicolas Marsch and his company Briarwood for conspiring with Barry Minkow to extort money from the homebuilder. A convicted felon, Minkow returned to prison in 2011 over his role in the scheme.
- Press release
Nov. 26, 2013, 9:34 AM
- Homebuilders have their tails in the air following this morning's housing starts report which beat expectations and also included a big building permits print - up 6.2% from September and 13.9% from a year ago.
- Full report
- ETF: XHB +0.7%, ITB +0.7%.
- Toll Bros. (TOL +1%), Pulte (PHM +1.1%), Hovnanian (HOV +1%), D.R. Horton (DHI +1.3%), Lennar (LEN -0.7%)
Nov. 25, 2013, 10:22 AM
- The homebuilders (ITB -1.1%), (XHB -0.8%) are outliers to the downside as the NAR's October Pending Home Sales Index slips to its lowest since December 2012. At 102.1, the index is also 1.6% below its level of a year ago. A bright spot in the data is its age. October, shutdowns, and debt defaults were a long time ago.
- The report has sent interest rates lower: At 2.77% just before the release, the 10-year yield is now 2.73%. TLT +0.4%, TBT -1%
- Individual homebuilders: Toll Bros. (TOL -1.3%), NVR (NVR -0.9%), KB Home (KBH -2.8%), Lennar (LEN -1.7%), Pulte (PHM -1.9%)
- Full report
Nov. 20, 2013, 8:18 AM
- Lennar (LEN) is the top pick, raised to Strong Buy from Buy, while Sell ratings are pulled on D.R. Horton (DHI) and KB Home (KBH) - both are now Holds.
- Earlier: Overall mortgage applications fell 2.3% last week, but purchase apps rose 8%. Later: October existing home sales will be reported.
- Related ETFs: XHB, ITB, PKB
LEN vs. ETF Alternatives
Lennar Corp is a homebuilder and a provider of financial services. Its homebuilding operations include the construction and sale of single-family attached and detached homes, and to a lesser extent multi-level residential buildings.
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