Lennar Corp., the second-largest U.S. homebuilder, reported a higher-than-expected profit for its fiscal first quarter as the nation's job gains bolstered demand for real estate purchases.
Net income for the three months through February was $144.1 million, or 63 cents a share, compared with $115 million, or 50 cents, a year earlier, the Miami-based company said in a statement Tuesday. The average estimate of 14 analysts was for earnings of 52 cents a share, data compiled by Bloomberg show.
Lennar has been able to operate with relatively large profit margins because it loaded up on land at distressed prices after the real estate crash. The company is now selling homes into a rebounding property market fueled by job growth.
"We expect an initial positive reaction," Keefe, Bruyette & Woods Inc. analysts Jade Rahmani and Ryan Tomasello wrote in a research note after the results were released. "We continue to believe Lennar's strong homebuilding operations, unique land sourcing and potential for value creation through ancillary businesses justify a premium valuation."
Lennar shares rose 3.5% to $48.32 at 9:44 a.m. in New York. It was the biggest gain in Bloomberg's index of North American homebuilders, which was up 1.1%.
Lennar delivered 4,832 homes in the quarter, up 12% from a year earlier. The average selling price climbed 12% to $365,000. New orders rose 10% to 5,794. The gross margins on home sales slipped to 22.7% from 23.1%, primarily because of an increase in land costs, the company said.
Purchases of new homes nationwide climbed in February for the fourth time in the past five months. Sales rose 2% to a 512,000 annualized pace following a 502,000 rate in January that was stronger than previously reported, Commerce Department data showed last week.
