Bad: Lennar misses revenue and guides light as margins compress; orders rise but incentives hit prices

Bad: Lennar’s fiscal Q3 (ended Aug 31, 2025) came in soft—revenue missed, margins fell, and Q4 guidance was lighter than Wall Street hoped. GAAP EPS was $2.29 (or $2.00 excluding mark‑to‑market investment gains) on $8.8B of revenue. Deliveries were 21,584; new orders rose 12% to 23,004. Homebuilding gross margin dropped to 17.5% as incentives pulled average selling price down to $383K. The stock fell roughly 3%–4% after hours following the release. (seekingalpha.com)

Year over year, earnings fell from $4.26 per share and revenue from $9.4B, while gross margin slid from 22.5%—a sizable compression as affordability pressures persisted. Backlog ended at 16,953 homes valued at $6.6B, roughly flat on units vs. last year but lower in dollars ($7.7B a year ago) due to pricing. (seekingalpha.com)

Price cuts and incentives weighed on profitability. Management said it used targeted incentives, including mortgage-rate buydowns, to sustain sales, which lowered ASP to $383K and pulled homebuilding gross margin down to 17.5%. SG&A rose to 8.2% of home sales as fixed costs spread over lower prices. (seekingalpha.com)

Volume was steady to better: deliveries were essentially flat year over year at 21,584, while new orders increased 12% to 23,004, aided by promotions. Backlog units were roughly unchanged, but backlog value fell to $6.6B from $7.7B last year, reflecting lower pricing. (seekingalpha.com)

Mix and one‑offs mattered. Financial Services earnings improved to $178M, partly offset by a $16M loss in Multifamily. “Lennar Other” benefited from investment mark‑to‑market gains; excluding these, EPS was $2.00, underscoring underlying margin pressure. The company also repurchased 4.1M shares for $507M. (seekingalpha.com)

Revenue was a miss versus roughly $9.0B expected. Q3 deliveries of 21,584 trailed the 22,414 analysts projected, while new orders of 23,004 topped the 22,522 consensus. Gross margin at 17.5% landed below the 17.8% expectation. Shares traded down about 3%–4% after hours on the report. (barrons.com)

Guidance was soft. For Q4, Lennar guided deliveries to 22,000–23,000 (vs. ~25,587 expected) and homebuilding gross margin to ~17.5% (vs. ~17.7% expected). It also guided ASP to $380K–$390K and SG&A to 7.8%–8.0%. Management noted rates eased late in Q3 and the Fed’s recent cut offers some optimism, but near‑term affordability remains the swing factor. (seekingalpha.com)

Margin path: Management expects Q4 gross margin to hold around 17.5%. Watch whether incentives can moderate and construction cost savings/cycle‑time gains (now ~126 days) can offset pricing pressure. (seekingalpha.com)

Demand vs. rates: If mortgage rates continue to ease, orders could stay resilient; if not, expect ongoing promotions. Industry data and management commentary both highlight widespread incentives across builders. (barrons.com)

Backlog conversion and pricing: With backlog value lower year over year, delivery mix and ASP will be key to Q4 earnings quality. (seekingalpha.com)

Strategy backdrop: Earlier in 2025 Lennar spun off Millrose land assets and acquired Rausch Coleman Homes to stay asset‑light and focused on volume. How these moves help margins and community count through 2026 bears watching. (newsroom.lennar.com)