NEW YORK (TheStreet) -- Lennar Corp. (LEN), one of the largest homebuilders in the U.S., will report second-quarter earnings results Wednesday before the opening bell. With its shares up more than 10% on the year to date, the Miami company has benefit from a slight rebound in the housing market, posting 236% stock gains in the past five years.
At $49.48, its share are up 10.4% for the year to date compared with a 9% gain for the period in the SPDR S&P Homebuilder ETF (XHB) at a time of concern growth expectations the entire sector has gotten too bullish.
Is it time to lock in profits in homebuilders? In Lennar's case, no.
Lennar, which has beaten the average analyst earnings estimate for 13 straight quarters, continues to execute on its business. The company consistently grows profits, driven by its focus on selling higher-priced homes that generate higher margins.
In the first quarter, for instance, the company posted a 19% year-over-year increase in home deliveries. The average sales price of homes delivered climbed more than 3% year over year to $326,000 from $316,000 in the first quarter of 2014. This led to earnings per share surging 43% year over year to 50 cents per share from 35 cents last year.
With Lennar posting a first-quarter backlog of 6,817 homes, up 20% year over year -- worth some $2.4 billion -- this implies strong pent-up demand. Equally important, the backlog marks a 24% year-over-year increase in home sales volume, a strong indicator of the type of numbers Lennar is likely to report for its second quarter.