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Lennar Corp LEN

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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Lennar's Profit Margins Remain Strong, but Home Deliveries Have Slowed Amid Supply Chain Issues

Analyst Note

| Brian Bernard, CFA, CPA |

Lennar reported record profit margins during its fiscal third quarter as the no-moat rated homebuilder continued to enjoy strong pricing power in the undersupplied United States housing market. While rising construction costs have become increasingly problematic for the homebuilding industry, Lennar has managed to maintain a very favorable price/cost equation. Indeed, during the third quarter, revenue per square foot increased 14% compared with an 8% increase in cost per square foot, which led to significant homebuilding gross margin expansion (420 basis points year over year to 27.3%). Management guided to even stronger pricing (average selling price 4% higher sequentially to $445,000) and gross margin (28%) during its fourth quarter.

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Company Profile

Business Description

After merging with CalAtlantic in February 2018, Lennar has become the largest public homebuilder (by revenue) in the United States. The company’s homebuilding operations target first-time, move-up, and active adult homebuyers mainly under the Lennar brand name. Lennar’s financial-services segment provides mortgage financing and related services to its homebuyers. Miami-based Lennar is also involved in multifamily construction and has invested in numerous housing-related technology startups.

Contact
700 Northwest 107th Avenue
Miami, FL, 33172
T +1 305 559-4000
Sector Consumer Cyclical
Industry Residential Construction
Most Recent Earnings May 31, 2021
Fiscal Year End Nov 30, 2021
Stock Type Cyclical
Employees 9,495

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