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alstry (35.28)

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June 25, 2008 – Comments (4)

Tomorrow morning Lennar reports earnings.  It is the first HB to give a full perspective on the Spring selling season.  Analysts have tempered their expectations guiding clients that revenues will be down a whopping 62% to approximately 1.1 Billion dollars.

Basically, analysts are expecting Lennar to deliver practically all of its backlog that it started the quarter.  Are you fricken kidding me?  Not only that, how low will Lennar's backlog be going forward?

As I have tried to explain in my zillions of posts, as more and more foreclosures hit the market, the ability of new builders to sell homes will become extremely difficult.

First, a lot of the foreclosures arise out of recent home sales concentrated in areas  where new builders build......who the heck wants to buy a home in a community located in the epicenter of foreclosureville.

Second, prices are now dropping at record rates and show now signs of abating.  With forclosures being priced at half off, it is simply becoming impossible for a new  builder to match on price....especially in light of the recent run up in material  costs.

Lennar reports in the morning.....will it be the biggest miss of any homebuilder in the last two years.............I guess we shall see.

4 Comments – Post Your Own

#1) On June 26, 2008 at 1:22 AM, dwot (61.86) wrote:

Well, something to look for...

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#2) On June 26, 2008 at 4:26 AM, DemonDoug (82.77) wrote:

I hope you are right alstry.  I'm tired of seeing my HB red thumbs in the red.

What I really want and can't wait for is to see perp walks for these guys.  Looks like Mozillo is going to get his comeuppance, I want the CEO of let's say BZH to do a perp walk.

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#3) On June 26, 2008 at 7:02 AM, alstry (35.28) wrote:

Numbers are in, home selling revenues came in a bit more than 62% below last year due to a 59% unit decline and about 8% per unit price decline.

The loss per share was more than analysts expected as well.

However, I thought the miss would be much bigger due to my thinking the LandSource deal closing in this quarter last year....it was the previous quarter and that threw off my estimates.

But going forward, things are a mess and the company is providing warning.  The completed and unsold homes are down 70% from last year and about 50% from last quarter.

That means they have relatively few vertical homes available  for liquidation this quarter.

Backlog dollar value is down to $1.3 Billion, or 56% below last year and spec count 70% below last year.

Current analyst estimates is for a decline of only 48% from last years revenue numbers.  Based on the above, and the company's warnings, I expect analysts to reduce their revnue estimates by at least 15% and who knows what they will do with their profit estimates.

In the end, Lennar missed and  its outlook is even worse.  Expect the media to pimp the fact that the loss is less than last year.....much of that has to do when impairments are timed.

If I am a betting person, the street will react to this report as a negative one for homebuilders in general today.

 

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#4) On June 26, 2008 at 1:33 PM, dwot (61.86) wrote:

You got it...

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