Lennar Debuts New Strategy as Part of Strong Earnings Report
Lennar (NYSE: LEN) recently reported strong fourth-quarter earnings and the stock has risen 11% since the announcement a week ago. But something even more interesting came out of that report, and it hinted at a new strategy Lennar is developing to take advantage of the growing demand for single-family rentals. The national homebuilder also explained how the measures it is taking will reduce the company's risk should a downturn in the real estate sector return.
Growth indicators for Lennar in the final quarter of the fiscal year, such as deliveries and new orders, were up smartly at 16% and 23% respectively. While deliveries were up 16%, revenue rose by only 8%, which was a result of lower average sale prices. Average sales prices fell from $413,000 to $400,000 which was driven by a higher concentration of starter homes, which naturally carry a lower price tag.
Gross margins increased to 21.5%, a jump of 10 basis points and an indication that the change in product mix to more starter homes is not negatively affecting profitability on each home.
Source Fool.com
