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Thursday's Premarket Movers Tell a Tale of 2 Economies

By Dan Caplinger – Dec 16, 2021 at 9:15AM

Key Points

  • Markets looked poised to soar early Thursday.
  • Accenture reported strong results bolstered by technology services and digital transformation.
  • Lennar stock dropped after the homebuilder seemed to signal a potential slowdown in growth.

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The battle between the digital world and the real world continues.

The stock market moved sharply higher after the Federal Reserve's latest decision on monetary policy late Wednesday, and the good mood that created carried over into Thursday morning. As of 8:45 a.m., stock futures contracts were higher, with Dow Jones Industrial Average (^DJI 0.23%) futures rising 225 points to 36,151. S&P 500 (^GSPC 0.30%) futures picked up 31 points to 4,740, suggesting a potential record high for the index, and futures on the Nasdaq Composite (^IXIC 1.01%) rose 88 points to 16,376.

The investing community has seen a division in the market lately between high-growth technology stocks and old-economy businesses. That division was especially apparent in premarket trading on Thursday, as shares of consulting giant Accenture (ACN 7.26%) rose sharply while homebuilder Lennar (LEN 0.76%) experienced significant declines. Below, we'll go through the earnings reports of both companies to see what they say about this divergence in the broader economy.

Person holding a tablet in front of a set of servers.

Image source: Getty Images.

Accenture puts an accent on its performance

Shares of Accenture jumped more than 9% in premarket trading on Thursday. The company's fiscal first-quarter results were strong, and Accenture said it expects even better performance for the full year.

Accenture's quarterly numbers were impressive. Revenue rose 27% year over year to $15 billion. Earnings of $2.78 per share were up 20% from the year-ago period, even before taking into account some one-time factors that boosted last year's bottom-line figures. Accenture's new bookings hit a new record of $16.8 billion, up 30% year over year, with $9.4 billion coming from its consulting business and $7.4 billion from outsourcing services.

Accenture saw strength in all of its industries, but the communications, media, and technology space was a notable outperformer, with segment sales rising 32%. The company called out its technology services as seeing extremely strong growth alongside its strategy & consulting and operations services businesses. Digital transformation efforts are definitely helping Accenture's overall business.

Going forward, Accenture now sees fiscal 2022 sales rising 19% to 22%, up from its previous 12% to 15% forecast. With a 10% boost to its quarterly dividend as well, shareholders basically got nothing but good news from Accenture Thursday morning, and that showed up in its share price.

Lennar moves lower

Meanwhile, shares of Lennar were down 5% in premarket trading. The homebuilder has rocketed to all-time highs throughout much of the past two years, but investors seemed less certain about the future for the industry.

Lennar's fiscal fourth-quarter results put a cap on a strong year for the homebuilder. Revenue for the quarter was up 24% on an 11% rise in home deliveries. Earnings of $3.91 per share were up 39% year over year despite having to include some mark-to-market losses on strategic investments. For the full 2021 fiscal year, revenue rose 21% and net income jumped nearly 80%.

However, investors saw some dark clouds on the horizon. Although backlogs increased by 26% to nearly 23,800 homes, new orders were up just 2% to 15,539. Moreover, board executive chair Stuart Miller noted the impact of supply chain and labor constraints in limiting housing supply, and improvement in those conditions in the future could take away some of what has underpinned the industry's strength. In its fiscal 2022 guidance, Lennar sees home deliveries staying at roughly the same pace as in the most recent quarter.

The specter of rising interest rates is casting a shadow on the homebuilding industry, and Lennar isn't invulnerable. Even so, it's important to note that Lennar stock came into the day up nearly 50% in 2021, so even a modest decline isn't that bad for long-term shareholders.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool owns and recommends Accenture. The Motley Fool has a disclosure policy.

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