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Lennar Stock Slides After Q3 Earnings Miss, Supply Chain Impact On Homebuilders

"Lennar, as well as the U.S. housing market, "continued to experience unprecedented supply chain challenges which we believe will continue into the foreseeable future," said chairman Stuart Miller.

Lennar Corp  (LEN) - Get Lennar Corporation Class A Report shares slumped lower Tuesday after the second-largest U.S. homebuilder posted modestly weaker-than-expected third quarter earnings and cautioned the supply chain disruptions would hit its top and bottom line over the final months of the year.

Lennar said adjusted earnings for the three months ending in August, the group's fiscal third quarter, were $3.27 per share, a penny shy of the Street consensus forecast, on revenues of $6.9 billion.

Looking into the final months of its fiscal year, Lennar said it sees home deliveries of around 18,000, compared to a prior forecast of around 20,343, and new orders in the range of 15,200 to 15,400.

"During the third quarter, our company and the homebuilding industry as a whole continued to experience unprecedented supply chain challenges which we believe will continue into the foreseeable future," said Lennar's executive chairman Stuart Miller.   

"The housing market has proven to be strong in the current environment as demand continues to outstrip limited supply," he added. "Accordingly, both limited supply and production will prevent excess production and extend the strong housing market conditions."  

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Lennar Corp shares were marked 2% lower in early trading Tuesday to change hands at $96.30 each, a move that would trim the stock's year-to-date gain to around 25%. 

Lennar's supply-chain caution echoed a Monday warning from its larger rival, DR Horton  (DHI) - Get D.R. Horton, Inc. Report, which trimmed its full-year revenue forecast due to what it called "shortages and delivery delays in certain building materials along with tightness in the labor market."

So-called 'closed home' estimates for the final three months of its fiscal year, which ends on September 30, were seen in the range of 21,300 to 21,700, a figure that's down around 7.4% from its July estimate.

Last month, U.S. Senators Jerry Moran and Jeanne Shaheen, as well as Commerce Secretary Gina Raimondo, met with industry leaders to address both supply chain issues and the soaring cost of lumber, which has added nearly $30,000 to the price of a new single-family home, the National Association of Home Builders has estimated.

Still, homebuilder sentiment improved for the first time in three months in September, the NAHB said Monday, thanks in part to falling lumber prices and increased buyer traffic.

“The September data show stability as some building material cost challenges ease, particularly for softwood lumber. However, delivery times remain extended and the chronic construction labor shortage is expected to persist as the overall labor market recovers,” said NAHB Chairman Chuck Fowke.