Lennar Corp. :LEN.B-US: Earnings Analysis: Q3, 2017 By the Numbers : October 12, 2017

Lennar Corp. reports financial results for the quarter ended August 31, 2017.

We analyze the earnings along side the following peers of Lennar Corp. – KB Home, Toll Brothers, Inc. and Hovnanian Enterprises, Inc. Class A (KBH-US, TOL-US and HOV-US) that have also reported for this period.


  • Summary numbers: Revenues of USD 3,268.79 million, Net Earnings of USD 246.72 million.
  • Gross margins widened from 21.89% to 21.96% compared to the same period last year, operating (EBITDA) margins now 12.44% from 12.15%.
  • Year-on-year change in operating cash flow of 87.26% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • One-time items weakened operating performance.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2017-08-31 2017-05-31 2017-02-28 2016-11-30 2016-08-31
Relevant Numbers (Quarterly)
Revenues (mil) 3268.79 3253.17 2346.67 3382.33 2836.96
Revenue Growth (%YOY) 15.22 19.06 17.71 14.83 13.81
Earnings (mil) 246.72 211.58 37.69 310.32 233.53
Earnings Growth (%YOY) 5.65 -2.16 -73.56 11.4 5.71
Net Margin (%) 7.55 6.5 1.61 9.17 8.23
EPS 1.06 0.91 0.16 1.34 1.01
Return on Equity (%) 3.27 2.88 0.52 4.44 3.56
Return on Assets (%) 5.86 5.13 0.95 8.18 6.26

Access our Ratings and Scores for Lennar Corp.

Market Share Versus Profits

Revenues History
Earnings History

LEN.B-US’s change in revenue this period compared to the same period last year of 15.22% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that LEN.B-US is holding onto its market share. Also, for comparison purposes, revenues changed by 0.48% and earnings by 16.61% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

The company’s earnings growth was influenced by year-on-year improvement in gross margins from 21.89% to 21.96% as well as better cost controls. As a result, operating margins (EBITDA margins) rose from 12.15% to 12.44% compared to the same period last year. For comparison, gross margins were 20.28% and EBITDA margins were 10.76% in the last reporting period.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Commodity; Low Cost, Commodity; High Cost, Differentiated; High Cost

Gross Margin Trend

Companies sometimes sacrifice improvements in revenues and margins in order to extend friendlier terms to customers and vendors. Capital Cube probes for such activity by comparing the changes in gross margins with any changes in working capital. If the gross margins improved without a worsening of working capital, it is possible that the company’s performance is a result of truly delivering in the marketplace and not simply an accounting prop-up using the balance sheet.

Gross Margin History
Working Capital Days History

LEN.B-US’s gross margin improvement has not produced any big difference in its working capital. Working capital days are currently 320.77, compared to last year’s level of 294.07 days. This leads Capital Cube to conclude that the improvements in gross margins are likely from operating decisions and not trade-offs with the balance sheet.

Gross Margin Versus Working Capital Days

Quadrant label definitions. Hover to know more

Customer Financed, Cash Starved, Supplier Financed, Cash Rich

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

LEN.B-US’s change in operating cash flow of 87.26% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings


The expansion in operating (EBIT) margins from 11.69% to 11.91% has also impacted the company’s earnings growth. However, one-time items have been a drag on the operating performance. As a result, the company’s pretax margins contracted from 11.97% to 11.27%.

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

Access our Ratings and Scores for Lennar Corp.

Company Profile

Lennar Corp. engages in the provision of real estate related financial services and investment management. It provides mortgage financing, title insurance and closing services for both buyers of its homes and others. The Realto segment is a commercial real estate investment, investment management, and finance company. The company was founded by Gene Fisher and Arnold Paul Rosen in 1954 and is headquartered in Miami, FL.

CapitalCube does not own any shares in the stocks mentioned and focuses solely on providing unique fundamental research and analysis on approximately 50,000 stocks and ETFs globally. Try any of our analysis, screener or portfolio premium services free for 7 days. To get a quick preview of our services, check out our free quick summary analysis of LEN.B-US.


The information presented in this report has been obtained from sources deemed to be reliable, but AnalytixInsight does not make any representation about the accuracy, completeness, or timeliness of this information. This report was produced by AnalytixInsight for informational purposes only and nothing contained herein should be construed as an offer to buy or sell or as a solicitation of an offer to buy or sell any security or derivative instrument. This report is current only as of the date that it was published and the opinions, estimates, ratings and other information may change without notice or publication. Past performance is no guarantee of future results. Prior to making an investment or other financial decision, please consult with your financial, legal and tax advisors. AnalytixInsight shall not be liable for any party’s use of this report. AnalytixInsight is not a broker-dealer and does not buy, sell, maintain a position, or make a market in any security referred to herein. One of the principal tenets for us at AnalytixInsight is that the best person to handle your finances is you. By your use of our services or by reading any of our reports, you’re agreeing that you bear responsibility for your own investment research and investment decisions. You also agree that AnalytixInsight, its directors, its employees, and its agents will not be liable for any investment decision made or action taken by you and others based on news, information, opinion, or any other material generated by us and/or published through our services. For a complete copy of our disclaimer, please visit our website www.analytixinsight.com.