Lennar (LEN) will report fourth quarter results tomorrow morning and host a call at 11:00.
Lennar reported a strong third quarter on October 3. Deliveries grew 12% and new orders grew 14%. The Hurricanes in the South delayed some deliveries, but the company sustained minimal damage overall. Sales incentives per home were 5.5%, the lowest percentage since 2006.
The housing market remains strong across most of the country and millennials are finally starting to buy homes, so we can expect the company to paint a bullish picture in the call tomorrow morning ahead of the all-important Spring selling season.
Management will also get the opportunity to discuss the massive acquisition it announced in late October. Lennar is acquiring CalAtlantic (CAA) for $5.7 billion, excluding $3.6 billion in net debt. Lennar was the second largest publicly traded homebuilders on its own and the CalAtlantic deal will put it ahead of DR Horton (DHI) as number one in terms of market cap.
The combined company will control ~240,000 homesites and will have ~1,300 active communities in 49 markets across 21 states, where ~50% of the U.S. population currently lives. CEO Stuart Miller said "This combination increases our scale in the markets that we already know and in the products we already offer to entry level, move up and active adult customers. As a result, the combined company will have a top 3 ranking in 24 of the top 30 markets in the country."
The homebuilders were on fire in 2017 (ITB +59%) and we will see if Lennar can set a positive tone for the group early in 2018.
Lennar trades at 2.2x book value, just above the average for the group.
KB Home (KBH) will report on Wednesday afternoon.