Shares of Lennar Corporation (NYSE: LEN) were down 3% on Tuesday. The stock has dropped 7% year-to-date. The homebuilder is scheduled to report its first quarter 2025 earnings results on Thursday, March 20, after market close. Here’s a look at what to expect from the earnings report:
Revenue
Analysts are projecting revenue of $7.44 billion for Lennar in Q1 2025, indicating an increase of nearly 2% from the first quarter of 2024. In the fourth quarter of 2024, revenue decreased 9% year-over-year to $9.9 billion.
Earnings
The consensus target for Q1 2025 earnings per share is $1.72, which compares to EPS of $2.57 reported in Q1 2024. In Q4 2024, adjusted EPS fell 22% YoY to $4.03.
Points to note
The housing market has been facing headwinds from inflation and high interest rates, which have continued to pressure affordability. Despite strong demand for housing, consumers are reluctant to buy new homes or move up to bigger houses as families expand due to economic pressures. These trends may have continued in the first quarter of 2025, impacting the top line.
Economic headwinds, along with policy changes and impacts from tariffs, are adding to the uncertainty in the housing market. It remains to be seen if any reductions in interest rates help boost home sales.
Last quarter, Lennar fell short of its expectations on new orders, which totaled 16,895 versus the projected 19,000. The company also saw deliveries decrease 7% YoY to 22,206 homes. For the first quarter of 2025, LEN has guided for new orders in the range of 17,500-18,000 and deliveries in the range of 17,000-17,500.
In order to help with affordability and drive sales, homebuilders have been offering price adjustments and various incentives to buyers. This has pressured margins and it is expected to continue in Q1. In Q4, Lennar saw its average sales price decrease by over 2% to $430,000 due to higher incentives and product mix. Its gross margin was 22.1%, which came below expectations of 22.5%. The company expects average sales price to range between $410,000-415,000 and gross margin to be 19.0-19.25% in Q1 2025.