Homebuilder Lennar's profit beats on higher home sales, prices

[October 03, 2017]   (Reuters) - Lennar Corp, the No.2 U.S. homebuilder, reported a higher-than-expected quarterly profit on Tuesday as it sold more homes at higher prices, underscoring the strength in demand for housing in the United States.

Despite being affected by the recent hurricanes, the company said orders and home deliveries remained strong.

"Once we get past the short-term impact from the storms, there will be increased economic activity and an increased demand for new homes," Chief Executive Stuart Miller said in a statement.

Lennar reported gross margin of 22.8 percent in the quarter, edging past its forecast of between 21.75 and 22 percent.

"The strong margins and reiteration of hurricane impact will be considered a positive for the shares," MKM Partners analyst Megan McGrath wrote in a note.

The stock was up 2.5 percent at $54.12 in light premarket trading.

Orders, a key indicator of future revenue, rose 8.4 percent to 7,610 homes in the third quarter ended Aug. 31.

Lennar said deliveries of about 950 homes will be pushed into fiscal 2018 because of the hurricanes that hit the southern United States. Texas, Florida, Georgia and South Carolina accounted for about 40 percent of annual homebuilding revenue, Lennar said last month.

Newly constructed houses built by Lennar Corp are pictured in Leucadia, California March 18, 2015. REUTERS/Mike Blake/File Photo

The Florida-based builder said it sold 7,598 homes in the quarter, compared with 6,779 homes a year earlier. The average selling price rose 3.6 percent to $375,000, the highest growth in five quarters.

Last month, bigger rival D.R. Horton Inc drastically cut its 2017 forecast for cash flow from operations, citing delays caused by the recent hurricanes.

Net income attributable to Lennar shareholders rose to $249.2 million, or $1.06 per share, from $235.8 million, or $1.01 per share, a year earlier.

The company's revenue rose 15.1 percent to $3.26 billion.

Analysts on average expected earnings of $1.01 per share on revenue of $3.24 billion, according to Thomson Reuters I/B/E/S.

Up to Monday's close, Lennar's shares had risen 23 percent this year.

(Reporting by Arunima Banerjee in Bengaluru; Editing by Arun Koyyur)

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