Lennar Corp.: Machine Recalibrating Again

研报英文原文证据摘录

Lennar Corp.: Machine Recalibrating Again

mberg

FY'26e ROTE to 7.7%, and our PT of $79 reflects 1.0xour YE’26 book value estimate of $78.22.

Price Performance Exchange-NYSEIncentives Move Lower, But There’s Nuances to Consider: Incentives in 2Q moved lower to

52 Week range USD 144.24-81.1812.9% vs 14.1% (+120 bps tailwind) last quarter while the magnitude of gross margin

improvement was not as material (only +40bps, and 2Q would have had positive fixed cost

leverage as well). We note that while incentives include base price changes, it apparently only

contemplates individual home changes (ex: if prices change on a community-wide level, or a

new community opens with lower price and margins, then that would not be included). So, it is

difficult to extrapolate the true incentive change more broadly. We also think LEN is continuing

to shift to temporary rate buy-downs and to ARMs, with ARMs depressing financial services

earnings rather than HB gross margin, insulating the magnitude of incentive pressure on HB Source: IDC

Link to Barclays Live for interactive charting

gross margins and shifting it to fin services (which was guided $25m below previous consensus).

Positively, management noted that the +40bps sequential gross margin improvement in 3Q

does not embed lower incentives (which we view as optimistic as rates move higher) but rather U.S. Homebuilding & Building

operational cost structure improvements. Products

Matthew Bouley

Detail on the Asset-Light Strategy: In the slide deck provided this quarter (link), management +1 212 526 9029

reiterated how the asset light strategy has driven improved cost of capital vs holding land on the matthew.bouley@barclays.com

balance sheet. We note that within the deposits line on the balance sheet there are two BCI, US