- Price
- $77.08
- Fair value
- $120.00
- Discount
- 35.8%
- Uncertainty
- High
- LSEG rating
- 3.33
- Moat
- None
- Next earnings
- 2026-12-16
- Next earnings is estimate
- Yes
- Company name
- Lennar
- Sector
- Homebuilding
- About
- Lennar is one of the largest homebuilders in the United States. It builds and sells single-family homes in many states, mostly to first-time and move-up buyers, and it also has mortgage, title and insurance businesses, a multifamily business and technology investments. In its fiscal Q3 2026, which ended August 31, 2026, it delivered 20,840 homes at an average price of $372,000 from 1,713 active communities. Lennar uses a land-light strategy: it owns fewer than 2.5% of the approximately 488,000 homesites that it owns and controls, and it buys much of its land through land banks, including Millrose Properties, which it spun off in 2025. Its strategy is to keep a steady volume of starts and sales, and to use incentives and price changes to sell homes when demand is weak.
- Thesis
- The market prices Lennar for low margins in a weak housing market. In fiscal Q3 2026, the gross margin on home sales fell to 15.8% from 17.5% a year earlier, and incentives were about 12.0% of the sales price. Mortgage rates rose through the quarter, new orders fell 9%, and Lennar lowered its target for 2026 deliveries to 80,000 to 81,000 homes. Investors fear that Lennar's choice to keep volume high and cut prices holds margins low for a long time. For the gap to close, three things must be true. The gross margin must stay at or above the 15.5% to 16.0% that Lennar expects for Q4 2026 and then start to rise. Incentives must fall as costs per square foot continue to go down. Mortgage rates must stop rising, so that buyers return. The Q4 2026 report, expected in mid-December 2026, and the outlook for fiscal 2027 give the next evidence. The gap closes slowly, over two to three years, because it depends on mortgage rates, which Lennar cannot control. The main reason it may not close is a longer period of high rates and weak consumer confidence, which would force more price cuts.
- Risks
- Mortgage rates decide how many people can buy a home. The 30-year rate was about 6.8% at the end of August 2026 and higher after that. If rates stay high, Lennar must keep large incentives, and margins stay low.
Lennar keeps its volume high and lowers prices when demand is weak. This strategy protects production efficiency, but it lowered the average sales price to $372,000 and the gross margin to 15.8% in fiscal Q3 2026.
Land costs rose year over year. Higher land costs, together with lower revenue per square foot, lowered the gross margin in fiscal Q3 2026.
Lennar holds technology investments that it marks to market. They caused a loss of $53 million in fiscal Q3 2026, and such changes make earnings less predictable.
- Balance sheet
- Cash: $1.2B
Debt: $4.3B
Net debt: $3.1B
At August 31, 2026, homebuilding debt was $4.30 billion: $650 million under the $3.1 billion revolving credit facility, $1.71 billion under the delayed draw term loan facility due 2028, $1.74 billion of senior notes and $197 million of mortgage notes and other debt. The senior notes include $1.05 billion due in 2027. Homebuilding cash was $1.15 billion, and homebuilding debt was 16.6% of total capital. Stockholders' equity was $21.56 billion. On October 15, 2026, Lennar sold $600 million of new senior notes due 2029 and 2032. Lennar capitalizes most of its interest into the cost of homes, so this page does not show an interest cover.
As of 2026-08-31.
- Checkpoints
- Dec 16, 2026 (estimate): Q4 2026 earnings: gross margin. Pending. Watch: A gross margin of 15.5% or more and 22,000 or more deliveries pass; a margin below 15.0% or a further cut in volume fails.
Mar 2027 (estimate): Spring selling season. Pending. Watch: Higher new orders with lower incentives in fiscal Q1 2027 pass; more price cuts and falling orders fail.
- Recent events
- 2026-10-15: Lennar sold $300 million of 5.700% senior notes due 2029 and $300 million of 5.950% senior notes due 2032.
2026-09-16: Lennar reported fiscal Q3 2026 results. Net earnings were $284 million, or $1.19 per diluted share, compared with $2.29 a year earlier. Deliveries fell 3% to 20,840 homes and new orders fell 9% to 20,879 homes. The gross margin on home sales was 15.8%. For Q4 2026, Lennar expects 22,000 to 23,000 deliveries and a gross margin of about 15.5% to 16.0%, and it lowered its target for 2026 deliveries to 80,000 to 81,000 homes from 82,000 to 83,000.
2026-09-16: During fiscal Q3 2026, Lennar repurchased 3 million shares for $256 million and redeemed $400 million of 5.25% senior notes due June 2026.
2026-06-05: Lennar named Jim Parker Chief Operating Officer and David Grove Executive Vice President, Homebuilding. Both report to Stuart Miller, the Executive Chairman, Chief Executive Officer and President.