Limping Lennar: Fool by Numbers

Recs

1

On Sept. 25, homebuilding giant Lennar (NYSE: LEN) released earnings for the third quarter ended Aug. 31.

  • The net loss includes a staggering $856.8 million of non-cash write-offs, as unsold homes, land in inventory, and option deposits lose some value every day. These write-offs are a fact of life in the industry, but the year-ago hit was just $76.2 million.
  • Come one, come all, and marvel at Lennar's incredible shrinking order backlog: $5.6 billion last year, $2.8 billion last quarter, and $2.2 billion today. Amazing!
  • And you should expect that trend to continue: the 5,800 new orders coming in during the quarter can't match the 7,600 homes completed at the same time.
  • If you were hoping for some positive regional data that might recommend a more localized homebuilder like Brookfield Homes (NYSE: BHS), you're out of luck. Lennar's weakness was spread in a rather uniform layer across the country, region by region.

(Figures in millions, except per-share data)

Income Statement Highlights

Q3 2007

Q3 2006

Change

Sales

$2,342

$4,182

(44.0%)

Net Profit

($514)

$207

N/A

EPS

($3.25)

$1.30

N/A

Diluted Shares

158.0

159.2

(0.8%)

Get back to basics with the income statement.

Margin Checkup

Q3 2007

Q3 2006

Change*

Operating Margin

2.5%

11.1%

(8.6)

Net Margin

(21.9%)

4.9%

(26.8)

*Expressed in percentage points

Margins are the earnings engine.

Balance Sheet Highlights

Assets

Q3 2007

Q3 2006

Change

Cash + ST Invest.

$128

$144

(10.9%)

Total Capital

$7,669

$8,715

(12.0%)

The balance sheet reflects the company's health.

Cash Flow Highlights

The info didn't include a cash flow statement.

Free cash flow is a Fool's best friend.

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Related Tickers

11/23/2009 4:02 PM
BHS $6.38 Up +0.07 +1.11%
Brookfield Homes C… CAPS Rating: *
LEN $13.65 Down -0.02 -0.15%
Lennar Corp CAPS Rating: *

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