Lennar Acquires Assets in the West - Analyst Blog

Lennar Corporation's LEN mortgage banking wing, Universal American Mortgage Company (UAMC), recently acquired some of the assets of Pinnacle Mortgage Group, Inc. (Pinnacle).
 
Pinnacle is a Colorado -based mortgage company that has license in seven Western states and has 10 offices in Southern California and Colorado.  Post acquisition, Pinnacle will join UAMC's retail mortgage operations and will serve new and resale homebuyers in 26 states.

The acquisition will offers easy access to mortgage finance for the homebuyers in California and Colorado, which will smoothen Lennar's operation in the region. The company has been witnessing solid business in the housing market in the West, which includes California and Nevada. In fact, the company reported high double-digit increase in net order units and value in the western region in fiscal first quarter 2014. Focusing further on this lucrative region will contribute towards the company's sales in the upcoming quarters.     

Lennar reported first quarter 2014 earnings results on Mar 20, surpassing the Zacks Consensus Estimate for both earnings and revenues. The strong results were driven by double-digit growth in homebuilding revenues and solid margins. Gross margin on home sales expanded a massive 300 basis points on the back of higher average selling price, favorable product mix (increased deliveries from higher margin communities), insurance recovery and reduced incentives. Management is optimistic and expects a strong spring selling season for fiscal 2014.

Lennar Corporation carries a Zacks Rank #3 (Hold).

Other Stocks to Consider

Some better ranked stocks in the homebuilding sector are William Lyon Homes WLH, Taylor Morrison Home Corp. TMHC and NVR, Inc. NVR. While William Lyon Homes and Taylor Morrison Home Corp. sport a Zacks Rank #1 (Strong Buy), NVR carries a Zacks Rank #2 (Buy).