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

Lennar (LEN) reported its fiscal 2025 Q2 earnings on Jun 16th, 2025. The total revenue of Lennar decreased by 4.4% to $8.38 billion in 2025 Q2, down from $8.77 billion in 2024 Q2. Lennar's EPS declined 47.5% to $1.81 in 2025 Q2 from $3.45 in 2024 Q2. Meanwhile, the company's net income declined to $481.82 million in 2025 Q2, down 49.8% from $960.59 million reported in 2024 Q2.

Lennar reported Q2 2025 results below Wall Street expectations, with EPS missing estimates by 6.7%. The company’s guidance for the next quarter remains in line with current market conditions.

Revenue

Lennar's revenue for 2025 Q2 faced a decline, with the homebuilding segment contributing $7.84 billion. Financial services added $298.10 million, while the multifamily division generated $230.31 million. The Lennar Other segment accounted for $5.24 million, culminating in total revenues of $8.38 billion.

Earnings/Net Income

Lennar's earnings per share fell sharply from $3.45 in 2024 Q2 to $1.81 in 2025 Q2, with net income dropping nearly 50% to $481.82 million. The company faces significant profitability challenges.

Post-Earnings Price Action Review

The strategy of purchasing Lennar shares following a quarter of revenue growth and holding them for 30 days has historically outperformed, delivering an overall return of 80.96% over the last three years, exceeding the benchmark by 19.73%. This approach boasts a compound annual growth rate (CAGR) of 22.12% and a Sharpe ratio of 0.69, indicating strong growth and risk-adjusted performance. However, the strategy also experienced substantial volatility, with a maximum drawdown of -44.42% and a 32.27% peak-to-trough fluctuation. Despite these fluctuations, the strategy has consistently demonstrated its potential for robust returns in favorable quarters.

CEO Commentary

Stuart Miller, Executive Chairman and Co-CEO of Lennar, expressed that the company is navigating a challenging housing market characterized by affordability issues and declining consumer confidence. He emphasized adherence to their strategy of driving starts, sales, and closings to build long-term efficiencies, noting that new orders reached 22,601 homes and deliveries totaled 20,131 homes, both aligning with their guidance. Miller acknowledged a decline in the average sales price to $389,000 due to market conditions but highlighted that gross margin met guidance at 18.0%. He reinforced the strength of their balance sheet and ongoing focus on operational efficiencies despite softer market conditions.

Guidance

For the third quarter of 2025, Lennar expects new orders and deliveries to range between 22,000 and 23,000 homes, with an anticipated average sales price between $380,000 and $385,000. They project a gross margin of approximately 18%, with selling, general, and administrative expenses as a percentage of home sales estimated between 8.0% and 8.2%. Financial services operating earnings are expected to be between $175 million and $180 million, contingent on market conditions.

Additional News

In recent corporate developments, Lennar has announced the issuance of $700 million in 5.20% senior notes due 2030, aimed primarily at refinancing $500 million of its 4.75% senior notes maturing in May 2025. This move is part of Lennar's ongoing efforts to manage its capital structure efficiently. Additionally, the company has repurchased 4.7 million shares of its common stock for $517 million, reflecting its commitment to returning value to shareholders. These actions highlight Lennar's strategic focus on maintaining robust liquidity and a conservative balance sheet amidst challenging market conditions.