Lennar: Market's not hit bottom yet
No. 3 homebuilder's profits fall, cuts outlook, CEO says market still looking for a floor.
NEW YORK (CNNMoney.com) -- Lennar Corp. warned Tuesday for the second time in a month that it would miss Wall Street forecasts and its CEO said the housing market hasn't hit bottom - the latest signs of weakness in the nation's once-booming real estate market.
Lennar (Charts) CEO Stuart Miller said the company was cutting its fourth-quarter earnings outlook "to a broad range of $1.00 to $1.30 per share." Wall Street analysts surveyed by First Call had been looking for EPS $1.60 a share for the quarter, on average.
The nation's No. 3 homebuilder reported earnings tumbled more than a third to $206.7 million, or $1.30 a share, for its third quarter ended Aug. 31 from $337.3 million, or $2.06 a share, a year earlier.
Analysts surveyed by First Call had been forecasting earnings of $1.81 a share for the third quarter before the company gave sharply lower guidance on Sept. 8, saying EPS would come in between $1.25 to $1.35. The consensus forecast then fell to $1.28.
Revenue in the third quarter rose to just under $4.0 billion from $3.5 billion a year earlier, helped by a nearly 8 percent rise in prices for homes delivered during the period.
But the value of Lennar's backlog of orders at the end of the quarter sank 30 percent from a year earlier, while new orders also fell 5 percent from year-ago levels.
"The housing market has continued to deteriorate, trailing down further and faster than anticipated," Miller said in a a statement.
"Although the economy remains strong and unemployment and interest rates remain relatively low, it is not clear that the homebuilding downturn has yet found a floor," he added.
The downturn in real estate is being closely watched for its impact not just on housing prices but on the broader economy.
Most recently the National Association of Realtors reported that existing home sales showed the first year-over-year decline in housing prices in more than 11 years in August.
Wednesday the Census Bureau is due to report on new home sales, and economists are forecasting a 3 percent drop in August.
Shares of Lennar and other homebuilders, including KB Homes (Charts), Pulte Homes (Charts), Centex Corp. (Charts), Toll Brothers (Charts) and Hovnanian (Charts), have all posted sharp declines this year, although they have rebounded slightly in recent weeks.