When Lennar Corporation (LEN) reports fourth-quarter earnings Tuesday after the bell, it won't just be analysts and retail investors paying attention. Warren Buffett, who made Lennar his biggest homebuilder bet, might be tuning in too.
The timing is interesting. The housing market remains a puzzle for investors, mortgage rates continue fluctuating with Federal Reserve policy, and recent analyst downgrades suggest not everyone is optimistic about where things are headed.
What Wall Street Expects
Analysts are forecasting fourth-quarter revenue of $9.02 billion, which would represent a decline from $9.95 billion in the same quarter last year. On the earnings front, expectations sit at $2.21 per share, down sharply from $4.03 in the prior year's fourth quarter.
Here's where Lennar's track record gets interesting. The company has beaten revenue estimates in eight of the last ten quarters, showing a consistent ability to outperform. But it stumbled in the most recent third quarter, missing expectations. On the earnings per share front, the company has missed analyst estimates for two consecutive quarters, though it beat estimates in eight of the last ten quarters overall.
The Buffett Factor
Warren Buffett, CEO of Berkshire Hathaway (BRK.A) (BRK.B), significantly increased his Lennar position in the second quarter. He added 7,048,993 Class A shares and boosted his Class B position by 19% to 180,930 shares.
The move came with an interesting twist. Buffett also bought shares of rival homebuilder DR Horton Inc (DHI) in the second quarter, only to exit that entire position by the third quarter. That makes Lennar his definitive play on the homebuilder sector, and a strong earnings report could provide a nice lift to Berkshire shares.
Recent Headwinds
December wasn't kind to Lennar from an analyst perspective. Barclays downgraded the stock from Equal Weight to Underweight, and JPMorgan followed suit by downgrading from Neutral to Underweight. Those moves add pressure to Tuesday's report.
The company's third-quarter results offer some context for what to watch. Lennar reported 23,004 new home orders, up 12% year-over-year, which sounds great. The backlog stood at 16,953 homes valued at $6.6 billion. But here's the catch: average selling prices declined, and management acknowledged needing additional incentives to move inventory amid housing market pressure.
That margin pressure is something investors will be watching closely. If management indicates more incentives are needed going forward, it could weigh on profitability and the stock price.
The Bigger Picture
This earnings report matters beyond just one company's quarterly performance. It offers a window into the housing market's health at a peculiar moment. Consumers are struggling with affordability, and mortgage rates remain a critical factor for both current homeowners and would-be buyers as we move into 2026.
The Federal Reserve's recent rate cut decision will likely dominate the conference call discussion. Analysts will want management's perspective on how lower rates might affect housing demand and whether we're finally seeing a turning point for the industry.
Lennar shares traded at $119.31 on Monday, within a 52-week range of $98.42 to $156.76. The stock is down 5.5% year-to-date in 2025, which isn't terrible but suggests investors remain cautious about the sector's near-term prospects.
Tuesday's report will either validate Buffett's bet or add to the concerns that prompted those recent downgrades. Either way, it should provide valuable insight into where housing goes from here.