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alstry (< 20)

Le Nar's Revenues Down only 62%



June 25, 2008 – Comments (1)

Right now, according to analysts' consensus, Lennar's revenues are only estimated to drop 62% from last year at around $1.1 Billion.

Now for any company 62% y/y revenue drop is a big number....but what if I told you that I don't think it is even going to be close for Lennar.  You should probably think I am nuts to think that sales could be off more than 62%. 

How about sales down closer to 75% to less than $800 million?  That would be over 30% less than current analyst estimates or around 1/4 of last years revenues.  I should be locked up in a mental institution immediately for such outrageous predictions.

Where are those HB pump monkeys when you need a good debate.  Remember they are NEVER wrong because they have all the connections and us bully bears have none. 

Not only do I think revenues are going to be way down, backlog will probably evaporate from last years numbers.  Going forward, people may ask, how are homebuilders going to generate enough revenues to cover their fixed expenses?

My guess is that this will be the HB report that shocks the world and wakes everyone up.  Revenues shrinking, Backlog evaporating, Costs rising, and Wall Street analysts and pump monkeys are telling you to take your money and invest in this stuff while their buddies may be selling to you?

This post is being made BEFORE tomorrow morning's release.  At this point, I have no idea whether I will be right on my prediction.  Unlike others, I am wrong and more often than I like.  But based on my read of the financial statements.......absent some HUGE land sale.....I simply have a hard time seeing how Le Nar can come close to current analyst estimates.

1 Comments – Post Your Own

#1) On June 25, 2008 at 10:27 AM, alstry (< 20) wrote:

Today's New Home sales report confirms a rapid deterioration in the selling environment.  We are up to 11 months of new home inventory in a rapidly slowing environment.

Couple the above with exploding newer home forclosures and we have a serious storm brewing for the second half of the year.  My guess is that sales could slow to the point where we have over 2 years of new home inventory by Fall.

HB analysis will come down to dirt and debt vs dirt and cash.  As vertical inventory is liqudated, builders will sell down to dirt and try to turtle as going vertical is a money losing cash flow negative propsition.

As land has little value, those with dirt and debt are in trouble, those with dirt and cash have a chance.  We shall see.


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