February 5, 2009 - Lennar Corp. (LEN-NYSE) together with its subsidiaries, operates as a home builder and provider of financial services in the United States. The company's homebuilding operations include the construction and sale of single-family attached and detached homes, and multi-level residential buildings, as well as the purchase, development, and sale of residential land directly and through unconsolidated entities.

It serves customers in Florida, Maryland, New Jersey, Virginia, Arizona, Colorado, Texas, California, Nevada, Illinois, Minnesota, New York, North Carolina, and South Carolina. Lennar Corporation was founded in 1954 and is based in Miami, Florida.

Yes. It's a home builder. And it may be worth investors' time to look into it, especially if they feel the worst is over for the economy, that unemployment will start going down. If those both are true, then Lennar will see much brighter days ahead.

Behind, it looks terrible. Sales went from $10.187 billion in 2007 to $4.575 billion in 2008, then dropped to $3.119 billion last year. This year, analysts see improvement. Consensus from 17 of them is $3.24 billion, and next year, they forecast $3.89 billion.

Earnings should follow the same pattern. They did in the past: 2007 was negative $12.31, then negative $7.00, and last year, negative $2.45. But this year, consensus is for a positive 7 cents a share (with a range of negative $1.36 to a positive 59 cents) and next year, forecast is for 91 cents a share with a range of negative 25 cents to a positive $1.51. Fiscal year ends November 30. Next earnings will be out in June. Expect flat numbers compared to a loss of 76 cents in the same quarter last year. Analysts see 4 cents a share for the third period (vs. minus 97 cents last year in the third quarter).

In the first quarter (ended February), things showed improvement. The loss was only 4 cents a share compared to a loss of 98 cents in the prior year's first period. Sales were only down 3%. Revenues were helped by a 6% increase in average selling prices. Profits were boosted by continued cost cutting and downsizing of the business to reflect reality. The company also reduced selling incentives in some of its markets.

Builders thrive on backlog and new orders. Lennar saw an increase in both in the first quarter, up 34% in backlog and 18% in new orders. Of course, last year's first quarter was a complete disaster so improvement on those numbers is easily achieved. And the federal government's tax credit for new home buyers was in full effect. That expires on April 30th unless renewed.

The industry as a whole is still very depressed with foreclosures continuing daily, putting more inventory on the markets in competition with Lennar's offerings. Lenders haven't opened up their doors for new business in a meaningful way. Loans are still tough to get, especially for higher end homes. With uemployment close to 10%, the universe of buyers is also shrinking.

Lennar has been trimming its debt and building cash. Total debt is now 52% of capital and cash is $1.33 billion. Total debt is $2.98 billion. There's also some off-balance sheet debt in joint venture recourse debt which management is paying down. It sits at $280 million now, compared to $1.8 billion in 2006. That reduction goes a long way to reduce the risk profile for LEN.

More numbers: Market cap is $3.23 billion. Price to book is 1.31. Book value is $13.22. Since there have been losses, there are no ratios or positive numbers for Return on equity, return on assets, operating margin or profit margin. Cash per share is $7.20. Beta is 1.59. In the last 52 weeks, the stock is up 111%. The stock traded as high as $18.93 on March 26. There are 184.89 million shares outstanding with a Float of 158.40 million. Insiders own 2.53% while Institutions have 97.40%. There is a dividend of 16 cents a share for a yield of .9%.

There's no question the housing industry is still suffering. But for investors who feel the worst is over (and some must because this stock has rallied well off its lows), LEN is a good stock to spend time on. It's reducing debt, widening margins, and right-sizing its business for the current market. If the trend for new orders and backlog continues, most of the analysts' estimates will have to move higher.

- Company Web site: www.lennar.com

Ted Allrich