Bear of the Day: Lennar (LEN)

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LEN isn’t going to see a turnaround in 2026. This Zacks Rank #5 (Strong Sell) is expected to see earnings decline for the fourth year in a row as the housing market continues to struggle. Lennar is one of the largest homebuilders in the United States. It builds affordable, move-up, and active adult homes. Lennar’s Financial Services segment also provides mortgage financing, title and closing services primarily for buyers of Lennar’s homes.It also originates mortgage loans through LMF Commercial, which are secured primarily by commercial real estate properties throughout the United States.Lennar’s Multifamily segment develops multifamily rental properties nationwide.Lennar Missed on Earnings in the Fiscal First Quarter of 2026On Mar 12, 2026, Lennar reported its fiscal first quarter 2026 results and missed on the Zacks Consensus Estimate by $0.08. Earnings were $0.88 versus the Consensus of $0.96.It was the fourth earnings miss in a row.Revenues from home sales fell 13% to $6.3 billion from $7.2 billion in the year ago quarter. Revenues were lower primarily due to an 8% decrease in the average sales price of homes delivered and a 5% decrease in the number of home deliveries.Home deliveries fell to 16,863 from 17,834 in the first quarter of 2025. The average sales price declined to $374,000 from $408,000.Gross margin, a key metric for homebuilders, fell to 15.2% from 18.7% in the year ago quarter. The gross margin decreased primarily due to lower revenue per square foot and higher land costs year over year, which were partially offset by a decrease in construction costs."Our first quarter of fiscal year 2026 was defined by the same persistent headwinds that have challenged the housing market for over three years — high mortgage rates, constrained affordability, cautious consumer sentiment, and geopolitical uncertainty, especially now including the recent conflict in Iran,” said Stuart Miller, CEO.Analysts Cut Lennar's Earnings Estimates for 2026 and 2027Many had hoped that 2026 would be the year that housing would finally turn around. But the analysts are bearish on Lennar for 2026.Five estimates were cut in the last week, pushing the fiscal 2026 earnings consensus down to $6.14 from $6.49. The consensus had been at $6.84 just 60 days ago.That’s an earnings decline of 23.8% as Lennar made $8.06 in fiscal 2025.It would be the fourth year of earnings declines, if the consensus holds.Here’s what it looks like on the price, consensus, and surprise chart. This is a classic Strong Sell chart.Image Source: Zacks Investment ResearchShares of Lennar Hit 6-Month LowsWith the housing market still challenged, investors are fleeing the homebuilder stocks. Lennar is down 28.5% in the last 6 months.Image Source: Zacks Investment ResearchIt’s still not that cheap, because earnings continue to fall. Lennar trades with a forward price-to-earnings (P/E) ratio of 15.8. A P/E under 15 usually indicates value.Lennar is shareholder friendly. In the fiscal first quarter, it bought 2 million shares for $237 million. It also pays a dividend, currently yielding 2.1%.With the homebuilders, it’s wait-and-see. Earnings are expected to recover in fiscal 2027, growing 27.1%, but that’s predicated on the housing market recovering.For investors interested in the homebuilders, you might want to wait on the sidelines for a confirmed turn in the earnings.Quantum Computing Stocks Set To SoarArtificial intelligence has already reshaped the investment landscape, and its convergence with quantum computing could lead to the most significant wealth-building opportunities of our time.Today, you have a chance to position your portfolio at the forefront of this technological revolution. In our urgent special report, Beyond AI: The Quantum Leap in Computing Power, you'll discover the little-known stocks we believe will win the quantum computing race and deliver massive gains to early investors.Access the Report Free Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Lennar Corporation (LEN): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks