Lennar's Q1 Earnings & Revenues Miss, New Home Orders Up Y/Y

Lennar Corporation LEN reported tepid results for the first quarter of fiscal 2026, wherein its adjusted earnings and total revenues missed the Zacks Consensus Estimate and declined year over year.

The quarter’s performance was adversely impacted by the softness in the housing market due to ongoing affordability challenges and a decline in consumer confidence. To counter the affordability issues, the company’s initiative of lowering the average sales price (ASP) adversely impacted the revenue growth during the quarter.

However, the company is consistently executing strategies to counter the market uncertainties by driving housing starts, sales and closings to ensure long-term business efficiencies. Also, its efforts to incentivize sales to enable affordability are expected to drive volumes further and foster consumer confidence.

LEN stock inched up 0.3% during yesterday’s after-hours trading session.

LEN’s Quarterly Numbers

Lennar’s adjusted earnings per share (EPS) of 88 cents missed the Zacks Consensus Estimate of 96 cents by 8.3%. In the year-ago quarter, the company reported an adjusted EPS of $2.14.

Total revenues of $6.62 billion also lagged the consensus mark of $6.83 billion by 3.1% and declined 13.2% year over year from $7.63 billion.

Lennar Corporation Price, Consensus and EPS Surprise

Lennar Corporation price-consensus-eps-surprise-chart | Lennar Corporation Quote

Segment Details of Lennar

Homebuilding: This segment’s revenues totaled $6.3 billion, down 13.5% from the prior-year quarter. Under the Homebuilding umbrella, home sales contributed $6.27 billion to total revenues, down 13.4% from a year ago. Land sales accounted for $15.2 million, down from $35.3 million in the prior-year quarter. The Other homebuilding unit contributed $10.5 million to homebuilding revenues, up from $8 million a year ago.

Home deliveries declined 5.4% to 16,863 units from 17,834 units in the prior-year quarter. The reported figure missed our model’s projection of 17,480 units for the quarter. The ASP of homes delivered was $374,000, down 8.3% from the year-ago figure due to continued weakness in the market. We predicted ASP to be $371,430 for the quarter.

New orders inched up 0.9% from the year-ago quarter to 18,515 homes. However, the potential value of net orders fell year over year by 3.9% to $7.14 billion.

Backlog at the fiscal first-quarter end increased 18.6% from the year-ago quarter to 15,588 homes. Potential housing revenues from backlog also grew year over year by 4.8% to $6.04 billion from $5.77 billion.

The gross margin on home sales was 15.2% for the quarter, down 350 basis points (bps) year over year. Notably, the reported figure came below our projection of 15.7% for the quarter. The decline was mainly due to decreased revenues per square foot and increased land costs year over year. This was partially offset by a decline in construction costs as Lennar continued to focus on construction cost savings. SG&A expenses, as a percentage of home sales, increased 130 bps to 9.8% due to lower revenues.

Financial Services: The segment’s revenues tumbled 22.2% year over year to $215.6 million from $277.1 million. Operating earnings for the quarter also declined to $91.3 million from $143.5 million a year ago.

Lennar Multi-Family: Revenues of $82.5 million in the segment were up 30.5% from the prior-year quarter. The segment registered operating earnings of $17.9 million for the quarter against an operating loss of $0.023 million a year ago.

Lennar Other: The segment’s revenues totaled $22.9 million, significantly up by 208.8% from $7.4 million a year ago. Its operating loss of $5.2 million was narrower than the loss of $89.3 million a year ago.

LEN’s Financials

At the fiscal first-quarter end, Lennar had homebuilding cash and cash equivalents of $2.09 billion, down from $3.44 billion at the end of fiscal 2025. The company had outstanding borrowings under the $3.1 billion revolving credit facility as of Feb. 28, 2026.

The total homebuilding debt was $4.07 billion as of the fiscal first-quarter end, up from $2.21 billion at the fiscal 2025-end. Homebuilding debt to capital was 15.7%, up from 8.9% at the fiscal 2025-end.

LEN repurchased 2 million shares for $237 million during the first three months of fiscal 2026.

Lennar Unveils Q2 Fiscal 2026 Guidance

For the fiscal second quarter, the company expects deliveries to be in the range of 20,000-21,000 homes, compared with 20,131 homes delivered in the year-ago period. Lennar expects the ASP of the delivered homes to be in the range of $370,000-$375,000, down from $389,000 reported a year ago.

The gross margin on home sales is expected to be between 15.5% and 16%, down from 17.8% reported a year ago. SG&A expenses, as a percentage of home sales, are likely to be in the range of 8.9-9.1%, compared with 8.8% reported in the year-ago quarter.

New orders are likely to be within 21,000-22,000 units, down from 22,601 homes reported a year ago.

Financial Services operating earnings are expected to be between $100 million and $110 million, down from $157.3 million reported a year ago.

LEN’s Zacks Rank & Stocks to Consider

Lennar currently carries a Zacks Rank #4 (Sell).

Here are some better-ranked stocks from the Construction sector.

Construction Partners, Inc. ROAD currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Construction Partners delivered a trailing four-quarter earnings surprise of 85.3%, on average. The stock has moved down 9.8% in the past six months. The Zacks Consensus Estimate for Construction Partners’ fiscal 2026 sales and EPS implies an increase of 24% and 30.9%, respectively, from a year ago.

Sterling Infrastructure, Inc. STRL presently sports a Zacks Rank of 1. Sterling delivered a trailing four-quarter earnings surprise of 15.7%, on average. The stock has trended up 22.8% in the past six months.

The Zacks Consensus Estimate for Sterling’s 2026 sales and EPS implies an increase of 24.6% and 25.8%, respectively, from a year ago.

Comfort Systems USA, Inc. FIX currently sports a Zacks Rank of 1. Comfort Systems delivered a trailing four-quarter earnings surprise of 35.2%, on average. The stock has surged 76.1% in the past six months.

The Zacks Consensus Estimate for Comfort Systems' 2026 sales and EPS implies an increase of 20.3% and 26.7%, respectively, from a year ago.

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