Analyst Note| Brian Bernard, CFA, CPA |
We’ve maintained our $115 per share fair value estimate for shares of no-moat homebuilder Lennar following its fiscal third-quarter earnings release. Lennar delivered strong homebuilding results (29% year-over-year revenue growth and 310-basis-point operating margin expansion to 23.4%) as it continues to work through its elevated backlog. However, declining new orders and pricing power point toward a less robust financial performance in fiscal 2023. Indeed, new orders declined 12% year over year, and the average selling price of new orders ($463,000) increased just about 1% year over year after five consecutive quarters of mid- to high-teens percentage growth.