Homebuilder stocks rose sharply on Wednesday as Lennar (LEN) reported a big spike in new orders.
Lennar posted 16 cents of EPS, a penny below than expectations. But the company said new home orders rose 20%, a figure that is spreading optimism throughout the industry this morning.
“Orders are the crown jewel in this release, up 20% to 3,027, ahead of any Street estimate we are aware of,” wrote Ticonderoga Securities analyst Stephen East. “We expected 2,640, up 6%. Pricing was also up, 5.9%, yet another strong showing. New segment reporting occurred, which highlighted a new region, Southeast Florida. That region was up 80% with the West up 33%.
East also noted that the company didn’t use too many discounts to entice buyers.
“After hitting a lull for a few quarters, the homebuilding operations are back on track as LEN�s embedded gross margin improvement highlights that the strong Orders were not bought. We think that is a very important point to note.”
Lennar rose 6.1% in midday trading, but other homebuilders were moving even more dramatically. KB Home (KBH) was up 15%.
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