Lennar B 2025 Q2 Earnings Misses Targets as Net Income Drops 49.8%

Lennar B (LEN.B) reported its fiscal 2025 Q2 earnings on July 1st, 2025. The earnings results fell short of market expectations, with notable declines in key financial metrics. The company’s guidance for the upcoming quarter seems in line with analysts' projections. Despite the challenging market conditions, Lennar remains focused on operational efficiencies and maintaining a strong balance sheet. The company continues to drive starts, sales, and closings to build long-term efficiencies in its business, as emphasized by the CEO during the earnings call.

Revenue
Lennar B experienced a 4.4% decline in total revenue, amounting to $8.38 billion for Q2 2025, compared to the previous year’s $8.77 billion. The homebuilding segment generated $7.84 billion, while the financial services segment contributed $298.10 million. The multifamily segment added $230.31 million to the total revenue, and Lennar Other accounted for $5.24 million.

Earnings/Net Income
Lennar B's earnings per share (EPS) plummeted by 47.5% to $1.81 in Q2 2025 from $3.45 in the same quarter the previous year. Net income also fell sharply by 49.8%, reaching $481.82 million from $960.59 million in Q2 2024. The earnings report indicates significant challenges for the company.

Post-Earnings Price Action Review
The post-earnings strategy of buying LEN.B stock when revenues beat expectations and holding for 30 days has proven ineffective. This approach produced a compounded annual growth rate (CAGR) of -0.10%, with an excess return of -68.54% and a Sharpe ratio of 0.00. These figures illustrate that the strategy failed to generate any positive returns and significantly underperformed the benchmark. The lack of positive gains and significant underperformance highlight the need for revising investment strategies surrounding Lennar B's earnings. The results suggest caution in relying on revenue beats as an indicator for post-earnings price action, emphasizing the importance of broader market and sector analysis.

CEO Commentary
Stuart Miller, Executive Chairman and Co-Chief Executive Officer of Lennar, noted, "While we continue to see softness in the housing market due to affordability challenges and a decline in consumer confidence, we adhered to our strategy of driving starts, sales, and closings. Our new orders reached 22,601 homes and deliveries were 20,131 homes, both within our guidance. We faced a decline in average sales price to $389,000, prompting us to incentivize sales to enhance affordability. Our focus on operational efficiencies and maintaining a strong balance sheet led to a liquidity position of $5.4 billion and a homebuilding debt to total capital of 11%."

Guidance
For the third quarter of 2025, Lennar expects new orders and deliveries between 22,000 and 23,000 homes, with an average sales price projected to be between $380,000 and $385,000. The company anticipates maintaining a gross margin of approximately 18% and expects selling, general, and administrative expenses as a percentage of home sales to range from 8.0% to 8.2%. Financial Services operating earnings are anticipated to be between $175 million and $180 million.

Additional News
In recent non-earnings related news, Lennar Corporation declared a quarterly cash dividend of $0.50 per share for both Class A and Class B common stock, payable on July 18, 2025, to holders of record at the close of business on July 3, 2025. The company also completed the acquisition of Rausch Coleman Homes in February 2025, further expanding its footprint in the homebuilding market. Additionally, Lennar completed the spin-off of Millrose Properties, highlighting its strategic focus on streamlining operations and capitalizing on core strengths.