Lennar (NYSE:LEN), one of the largest home construction firms in the U.S., plans to release its earnings around June 16, 2025, for a quarter that is expected to have experienced a slowdown in business due to ongoing difficulties in the U.S. housing market caused by high home prices and elevated mortgage rates. The consensus anticipates earnings of approximately $1.96 per share, a decrease from $3.38 per share in the same quarter last year, while revenues are expected to be around $8.2 billion, reflecting a 6% decline from the previous year. Lennar currently has a market capitalization of $29 billion. Revenue over the past twelve months was $36 billion, with an operational profit of $4.6 billion and net income of $3.7 billion. Therefore, for those seeking potential gains with less volatility than individual stocks, the Trefis High Quality Portfolio offers an alternative, having outperformed the S&P 500 and generated returns exceeding 91% since its inception. See earnings reaction history of all stocks
Lennar’s Historical Odds Of Positive Post-Earnings Returns
Here are some insights regarding one-day (1D) post-earnings returns:
- Over the past five years, there have been 20 recorded earnings data points, with 9 positive and 11 negative one-day (1D) returns. In summary, positive 1D returns were observed approximately 45% of the time.
- Nonetheless, this percentage drops to 33% when analyzing the data for the last three years instead of five.
- The median of the 9 positive returns is 3.6%, while the median of the 11 negative returns is -4.0%.
Further information on observed 5-Day (5D) and 21-Day (21D) returns after earnings is compiled along with the statistics in the table below.
Correlation Between 1D, 5D, and 21D Historical Returns
A comparatively less risky strategy (though not helpful if the correlation is weak) involves understanding the correlation between short-term and medium-term returns following earnings. By identifying pairs with the highest correlation, traders can execute suitable trades. For instance, if 1D and 5D show the greatest correlation, a trader can take a “long” position for the next five days should the 1D post-earnings return be positive. Below is some correlation data based on five-year and three-year (more recent) history. Note that the correlation 1D_5D indicates the correlation between 1D post-earnings returns and subsequent 5D returns.
Is There Any Correlation With Peer Earnings?
Occasionally, the performance of peers can influence post-earnings stock reactions. Indeed, pricing could start prior to the earnings announcement. Below is historical data comparing Lennar’s post-earnings performance with peers that reported earnings right before Lennar. For a fair comparison, peer stock returns also indicate post-earnings one-day (1D) returns.
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