Homebuilder Lennar Corp. expects to post a loss of between $0.88-$1.28/share for its fiscal Q4 ended Nov. 30, due to (1) land charges related to valuation adjustments and (2) abandoned land options. Aside from these one-time items, Lennar would have earned $0.70-$0.75/share; full results will be released on Jan. 17. The company had previously guided to a F4Q profit of $1-$1.30/share, and analysts were expecting earnings of $1.07/share. Lennar delivered 14,006 homes in the quarter, down from 14,403 in the year-ago period. New orders fell 6% to 9,606 homes. CEO Stuart Miller noted that though deliveries were up overall in 2006, the company experienced "materially lower" gross margins "as a result of deteriorating market conditions in the home-building industry," and sees no signs the home-building market has hit bottom. Lennar also announced expanding its "LandSource" Los Angeles-area joint venture to include MW Housing Partners, which is managed in part by CalPERS. Lennar, which will maintain a 19% interest in the venture, expects the deal to bring $500m in overall profit, with $125m recognized at February 2007 closing.
• Sources: Lennar press release, WSJ, MarketWatch, Forbes
• Related commentary: Housing: You Call This a Bottom?!, Notable Calls: Color on Lennar News, News of Housing Bottom Premature, Seeking Alpha's Housing Bubble and Real Estate Market Tracker, Housing Stocks' Recent Runup -- Sustainable?
• Potentially impacted stocks and ETFs: Lennar Corporation (NYSE:LEN) Competitors: Pulte Homes (NYSE:PHM), Centex (CTX), D.R. Horton (NYSE:DHI), KB Home (NYSE:KBH), Toll Brothers (NYSE:TOL). ETFs: iShares Dow Jones US Home Construction (BATS:ITB), PowerShares Dyn Building & Construction (NYSEARCA:PKB), SPDR Homebuilders (NYSEARCA:XHB)
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