http://investmentresearchdynamics.com/homebuilders-jump-on-lennars-highly-managed-earnings-report/
For starters, let’s not forget that all indications seem to indicate
that the housing market hit a wall in August. So LEN’s earnings
released today are “looking in the rear view mirror” numbers.
But not only that, Lennar has blown smoke across that mirror, making
it difficult to determine what’s real and what’s questionable
accounting. In fact, Lennar has not even filed an 8-K SEC disclosure,
which companies typically file before they release their earnings report
to the public. I went to look for it after I scanned LEN’s press
release and found several troubling aspects to the numbers they reported
this morning.
The bottom line is that, despite the large contribution to LEN’s
revenues from higher prices, LEN’s gross margin was barely higher than
for the same quarter last year. Furthermore, they included several
accounting “add-backs” to boost their net income. Finally, like all
these homebuilders, LEN has removed a significant portion of its
interest expense from its income statement. I won’t know just how much
until they file their 10-Q.
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