Considering Upcoming Lennar Earnings: Buy or Sell Their Shares?
Lennar Corporation (NYSE: LEN), the homebuilding giant, is set to announce its third-quarter earnings on September 18, 2025. The company, known for focusing on first-time and entry-level buyers, has been navigating challenging market conditions.
Over the past five years, Lennar has recorded 20 earnings data points, with approximately 40% positive one-day (1D) returns. However, this percentage drops to 25% when considering data from the last three years. The median of the positive returns is 3.7%, while the median of the negative returns is -4.0%.
In terms of market performance, the High Quality portfolio has eclipsed the S&P 500 and achieved over 91% returns since its inception. Lennar, with a current market capitalization of $36 billion, has been performing relatively well compared to its peers, with equity contributions generally comparable, albeit with variations depending on market conditions and project scale.
The revenue outlook for Lennar is not as rosy, with projections indicating a 4% decline year-over-year. This decline is attributed to high mortgage rates, affordability challenges, and weak consumer confidence. Despite this, the company managed to generate $35 billion in revenue over the past twelve months, achieving operational profitability, recording operating profits of $4.1 billion and net income of $3.3 billion.
Sales incentives have provided some assistance in sustaining unit sales but have contributed to margin compression. Historical information reveals that the performance of peers can influence the stock reaction following earnings, and Lennar has been relying more on sales incentives to maintain sales momentum.
For a trader, a relatively lower-risk strategy involves identifying the pair with the highest correlation between short-term and medium-term returns following earnings. If the 1D post-earnings return is positive, a trader can position themselves "long" for the subsequent 5 days, especially if the 1D and 5D display the highest correlation, as has been the case in the past.
The correlation between 1D post-earnings returns and the resulting 5D returns is represented by 1D_5D. This correlation data is derived from a 5-year analysis, with the correlation data from a 3-year (more recent) analysis also provided.
Investors interested in Lennar's performance might also be interested in the Trefis RV strategy, which has outperformed its all-cap stocks benchmark, producing strong returns for investors. Consensus projections indicate approximately $2.10 per share in earnings and $9.05 billion in revenue for the upcoming Q3 earnings.
As Lennar prepares to announce its earnings, investors and traders will be closely watching the company's performance and the potential impact of market conditions on its stock.
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