Lennar smashes past street estimates in Q2

Shares of homebuilder Lennar (LEN) rose 2.6% during premarket trading after the company topped both top and bottom line estimations during Q2 2018. This is the first quarterly result that includes the company’s recently acquired CalAtlantic’s operations. The company’s strong results were mainly due to steady economic growth and low rate of unemployment.

Revenue rose 67% to $5.5 billion, easily topping consensus estimate of $5.11 billion. Earnings rose to $310.3 million, or $0.94 per share from $213.7 million, or $0.89 per share, a year earlier. Excluding items, the company earned $1.58 per share. Analysts expected the company to report earnings of $0.45 a share.

Lennar has also witnessed an improvement in its orders trend. During the quarter, new orders rose 62%, while Deliveries improved 57%.

“Concerns about rising interest rates and construction costs have been offset by low unemployment and increasing wages, combined with short supply based on years of underproduction of new homes. Demand remained strong as we continued to see pricing power support margins while affordability remained consistent,” said Stuart Miller, Executive Chairman.

The company, under the leadership of Rick Beckwitt, had earlier made it clear that it plans to divest its Rialto and multifamily business to stay in the pure homebuilding business. The company is in talks with banks to evaluate strategic alternatives for the two segments.