As the Q1 earnings season wraps, let’s dig into this quarter’s best and worst performers in the home builders industry, including Lennar (NYSE: LEN) and its peers.
Traditionally, homebuilders have built competitive advantages with economies of scale that lead to advantaged purchasing and brand recognition among consumers. Aesthetic trends have always been important in the space, but more recently, energy efficiency and conservation are driving innovation. However, these companies are still at the whim of the macro, specifically interest rates that heavily impact new and existing home sales. In fact, homebuilders are one of the most cyclical subsectors within industrials.
The 12 home builders stocks we track reported a slower Q1. As a group, revenues beat analysts’ consensus estimates by 0.8%.
While some home builders stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 4% since the latest earnings results.
Lennar (NYSE: LEN)
One of the largest homebuilders in America, Lennar (NYSE: LEN) is known for constructing affordable, move-up, and retirement homes across a range of markets and communities.
Lennar reported revenues of $7.63 billion, up 4.4% year on year. This print exceeded analysts’ expectations by 2%. Despite the top-line beat, it was still a mixed quarter for the company with an impressive beat of analysts’ EPS estimates but a miss of analysts’ backlog estimates.
Stuart Miller, Executive Chairman and Co-Chief Executive Officer of Lennar, said, "We are pleased to report our 2025 first quarter results that were both constructive and strategic for Lennar. During the quarter, we continued to focus on our strategy of matching production pace with sales pace and maintaining even flow production. Additionally, during the quarter we distributed shares of Millrose Properties, Inc. ("Millrose") to our shareholders, furthering our asset-light strategy.
The stock is down 9.6% since reporting and currently trades at $108.50.
Is now the time to buy Lennar? Access our full analysis of the earnings results here, it’s free.
Best Q1: Toll Brothers (NYSE: TOL)
Started by two brothers who started by building and selling just one home in Pennsylvania, today Toll Brothers (NYSE: TOL) is a luxury homebuilder across the United States.
Toll Brothers reported revenues of $2.74 billion, down 3.5% year on year, outperforming analysts’ expectations by 9.9%. The business had an incredible quarter with a solid beat of analysts’ EBITDA estimates and an impressive beat of analysts’ EPS estimates.
Toll Brothers delivered the biggest analyst estimates beat among its peers. The market seems content with the results as the stock is up 2.4% since reporting. It currently trades at $107.01.
Is now the time to buy Toll Brothers? Access our full analysis of the earnings results here, it’s free.
Weakest Q1: LGI Homes (NASDAQ: LGIH)
Based in Texas, LGI Homes (NASDAQ: LGIH) is a homebuilding company specializing in constructing affordable, entry-level single-family homes in desirable communities across the United States.
LGI Homes reported revenues of $351.4 million, down 10.1% year on year, falling short of analysts’ expectations by 5%. It was a disappointing quarter as it posted a significant miss of analysts’ adjusted operating income estimates.
As expected, the stock is down 7.7% since the results and currently trades at $54.66.
Read our full analysis of LGI Homes’s results here.
Installed Building Products (NYSE: IBP)
Founded in 1977, Installed Building Products (NYSE: IBP) is a company specializing in the installation of insulation, waterproofing, and other complementary building products for residential and commercial construction.
Installed Building Products reported revenues of $684.8 million, down 1.2% year on year. This number beat analysts’ expectations by 1.5%. More broadly, it was a satisfactory quarter as it also logged an impressive beat of analysts’ organic revenue estimates but a significant miss of analysts’ EPS estimates.
The stock is flat since reporting and currently trades at $162.79.
Read our full, actionable report on Installed Building Products here, it’s free.
TopBuild (NYSE: BLD)
Established in 2015 following a spinoff from Masco Corporation, TopBuild (NYSE: BLD) is a distributor and installer of insulation and other building products.
TopBuild reported revenues of $1.23 billion, down 3.6% year on year. This result was in line with analysts’ expectations. Taking a step back, it was a satisfactory quarter as it also produced a solid beat of analysts’ adjusted operating income estimates.
The stock is down 1.2% since reporting and currently trades at $288.25.
Read our full, actionable report on TopBuild here, it’s free.
Market Update
As a result of the Fed’s rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed’s 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025.
Want to invest in winners with rock-solid fundamentals? Check out our Top 5 Growth Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
Join Paid Stock Investor Research
Help us make StockStory more helpful to investors like yourself. Join our paid user research session and receive a $50 Amazon gift card for your opinions. Sign up here.
