Lennar’s fourth quarter was met with a negative market reaction as profitability fell short of Wall Street expectations, despite revenue coming in ahead of analyst estimates. Management attributed the margin pressure to a challenging housing market shaped by persistent affordability issues and weakened consumer confidence, which was exacerbated by the government shutdown. Executive Chairman and Co-CEO Stuart Miller noted that “sales volume has been difficult to maintain and required additional incentives,” resulting in further margin deterioration. The company pointed to operational changes, such as a shift toward offering more affordable homes and increased sales incentives, as necessary responses to the ongoing affordability crisis facing buyers.
Is now the time to buy LEN? Find out in our full research report (it’s free for active Edge members).
Lennar (LEN) Q4 CY2025 Highlights:
- Revenue: $9.37 billion vs analyst estimates of $9.13 billion (5.8% year-on-year decline, 2.6% beat)
- Adjusted EPS: $2.03 vs analyst expectations of $2.18 (6.8% miss)
- Adjusted EBITDA: $676.8 million vs analyst estimates of $846.4 million (7.2% margin, 20% miss)
- Operating Margin: 6.9%, down from 13.7% in the same quarter last year
- Backlog: $5.24 billion at quarter end, down 2.4% year on year
- Market Capitalization: $26.15 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Lennar’s Q4 Earnings Call
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Alan Ratner (Zelman & Associates) asked about continued margin pressure despite reduced incentives. Co-CEO Jonathan Jaffe attributed this to weaker consumer confidence from the government shutdown and variability in market strength across regions.
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John Lovallo (UBS) questioned the ability to recapture margins as conditions improve. Executive Chairman Stuart Miller detailed that ongoing efficiency gains and a lower incentive structure could drive margin upside without needing to increase volume.
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Stephen Kim (Evercore ISI) inquired about the impact of technology on management structure. Miller confirmed that technology adoption enables a flatter organization, reducing the need for external hires and increasing operational agility.
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Michael Rehaut (JPMorgan Chase) pressed on Lennar’s commitment to volume over margin stabilization. Miller stated the company remains focused on volume to build efficiencies and is prepared to adjust based on evolving market conditions.
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Susan Maklari (Goldman Sachs) asked about further improvements in inventory turnover. Miller pointed to technology and a focus on core product offerings as key to driving higher inventory churn and cash flow efficiency.
Catalysts in Upcoming Quarters
Moving forward, the StockStory team will closely watch (1) whether sales incentives can be meaningfully reduced as affordability improves or government programs are introduced, (2) the pace of efficiency gains in construction costs and build times, and (3) the ability to sustain high inventory turns as the company scales its asset-light model. Progress in technology adoption and any decisive federal action on housing affordability will also be important signposts.
Lennar currently trades at $107.10, down from $117.37 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free for active Edge members).
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