Lennar Earnings Preview

Homebuilder Lennar (NYSE: LEN) reports fourth-quarter results before the bell on Wednesday and analysts are expecting a profit of 17 cents per share on revenue of $881.4 million million, a better than 6% jump from the year-earlier quarter. For all of 2011, analysts expect Florida-based Lennar to report revenue of $3.06 billion, slightly below the 2010 number of $3.07 billion.

The EPS estimate on Lennar has drifted down over the past 90 days to 18 cents from 19 cents. Lennar met third-quarter estimates of 11 cents on sales of $820.2 million. However, revenue has slumped for four straight quarters.

In a recent research note, Goldman Sachs boosted its price target on Lennar to $18 from $14, but that new target is below where the shares currently trade, which is in the $21 area.

In the past 90 days, homebuilder stocks have been on fire with Lennar surging 40% and the bullish sentiment has continued in 2012 as the stock is up 6%, though that lags the returns offered by rivals DR Horton (NYSE: DHI), KB Home (NYSE: KBH) and PulteGroup (NYSE: PHM).

"With homebuilding stocks outperforming the market by 3,500 basis points in the last three months, we would wait for a pullback or a clearer picture that housing is healing quicker than it currently is," Goldman Sachs said in the note, CNBC reported.

Lennar's rise has been impressive considering the fourth-quarter is usually a weak season for homebuilders and that unemployment remains elevated. While the company sells affordable homes to new buyers and those looking to upgrade to a pricier home, a glut of foreclosures and banks holding back on mortgage loans may have hampered Lennar's fourth-quarter results.

The company does business in 17 states and owned 91,123 homesites and had access through option contracts to an additional 16,847 homesites as of May 2011.