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Omar Venerio
Omar Venerio
Articles (1710) 

Tuesday Morning Market Highlights

Markets green, shares of Lennar fall despite beating Wall Street

US Markets

U.S. stocks were in the green on Tuesday morning, as were global equities, on news that China's retail sales rose in August by 0.5% year-over-year, higher than expected. The Dow gained 0.47% to 28,124, the S&P 500 index rose 0.89% to 3,413 and the Nasdaq Composite Index was up 1.47%, to 11,219.

Gainers

• Tesla, Inc (NASDAQ:TSLA) +12%

• Darden Restaurants, Inc. (NYSE:DRI) +1.5%

• Tapestry, Inc. (NYSE:TPR) +1%

• Host Hotels & Resorts, Inc. (NYSE:HST) +0.34%

Losers

• Nikola Corporation (NASDAQ:NKLA) -8.6%

• Kohl's Corporation (NYSE:KSS) -1.9%

• Darden Restaurants, Inc. (NYSE:DRI) -0.08%

Global Markets

The main European stock markets traded in the green. The UK's FTSE 100 rose 1.22%, France's CAC 40 gained 0.53%, Germany's Dax was up 0.37% and Spain's Ibex 35 advanced 1.37%.

In Asia, Japan's Nikkei 225 lost 0.44%, India's BSE Sensex advanced 0.74%, Hong Kong's Hang Seng jumped 0.38% and China's Shanghai Composite was up 0.51%.

Lennar releases earnings report

Shares of Lennar Corporation (NYSE:LEN) fell more than 3% on pre-market trading Tuesday after the company announced its fiscal third-quarter 2020 results the previous day. The company posted earnings per share of $2.12, beating analysts' estimates by 56 cents. Revenue of $5.87 billion grew 0.2% year-over-year and also beat expectations by $340 million.

CEO Stuart Miller had the following to say:

"We are pleased to announce our results for the third quarter where we achieved net earnings of $666.4 million, or $2.12 per diluted share, compared to $513.4 million, or $1.59 per diluted share in the prior year. Our third quarter results benefited from robust market conditions combined with the solid execution of our homebuilding and financial services businesses. Fundamentals in the housing market continued to remain strong supported by record low interest rates and a continued undersupply of new and existing inventory."

By segment, revenues from home sales rose 3% in the third quarter to $5.5 billion, up from $5.3 billion in the same quarter of 2019. The growth was driven by a 2% increase in the number of home deliveries and a 1% increase in the average sales price of homes delivered. Further, new home deliveries increased to 13,809 homes in the quarter from 13,513 homes in the third quarter of the previous fiscal year.

Homebuilding operating margins reached $832.0 million, compared to $657.1 million a year ago. The gross margin on home sales was $1.3 billion, or 23.1%, up from 20.4% in the third quarter of 2019, while the operating margin on home sales was 15.1% compared to 12.0%.

On the financial services segment, the operating earnings were $135.1 million, higher than $74.7 million in the comparable period of 2019 due to an increase in volume and margin.

Ken Fisher (Trades, Portfolio) cut his investment in the stock by 3% to 1,284,556 shares during the quarter, while Ken Heebner (Trades, Portfolio) reduced his holdings by 10% to 840,000 shares. Tom Gayner (Trades, Portfolio) sold out the stock.

Disclosure: The author holds no positions in any stocks mentioned.

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About the author:

Omar Venerio
Omar Venerio is a capital markets, derivatives, corporate finance and financial management professor and Area Head of Finance. He is passionate about the stock market and providing independent fundamental research and hedge fund and insider trading-focused investigation.

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