Lennar Corp Class A (NYSE:LEN) stock fell 4.53% (As on September 20, 11:17:01 AM UTC-4, Source: Google Finance) after the company reported better-than-expected third quarter results as new home orders increased amid strong housing demand. New home orders increased 5% YoY to 20,587 homes, reflecting robust demand in the housing market. Deliveries rose 16% to 21,516 homes compared to the same period last year. The company’s gross margin on home sales was 22.5%, while operating margin came in at 15.8%. Lennar ended the quarter with $4 billion in cash and no outstanding borrowings on its $2.2 billion revolving credit facility. Third quarter net earnings attributable to Lennar in 2024 were $1.2 billion, or $4.26 per diluted share, compared to third quarter net earnings attributable to Lennar in 2023 of $1.1 billion, or $3.87 per diluted share. Further, employment was strong, housing supply remained chronically short due to production deficits of over a decade, and demand was solid driven by strong household formation. Although affordability continued to be tested during the quarter, purchasers remained responsive to increased sales incentives.

LEN in the third quarter of FY 24 has reported the adjusted earnings per share of $3.90, beating the analysts’ estimates for the adjusted earnings per share of $3.64. The company had reported the adjusted revenue of $9.42 billion in the third quarter of FY 24, beating the analysts’ estimates for revenue of $9.16 billion. The  average sales price, net of incentives, per home delivered was $422,000 in the third quarter, slightly down from last year, and offset by SG&A expenses of 6.7%, which were better than expectations, resulting in a 15.8% net margin.

Additionally, the company repurchased $519 million of the common stock, had no outstanding borrowings on the $2.2 billion revolver and cash of $4.0 billion, ending the quarter with homebuilding debt to total capital of 7.6%. During the quarter, the company continued the migration to the land light strategy. This was evidenced by the years supply of owned homesites improving to 1.1 years from 1.5 years last year and the controlled homesite percentage increasing to 81% from 73% year over year.

For the fourth quarter, Lennar expects deliveries between 22,500-23,000 homes and new orders of 19,000-19,300 homes. The company forecasts an average sales price of about $425,000 and gross margins to remain flat compared to Q3.