Lennar Corporation (LEN - Free Report) surpassed expectations on both counts for the seventh time in a row.

The company’s third-quarter fiscal 2017 adjusted earnings of $1.06 per share surpassed both the Zacks Consensus Estimate and the year-ago level of $1.01 by 5%.

Solid demand for homes, favorable job market and interest rates along with increased consumer confidence helped the homebuilder post higher numbers.

Total revenues of $3.26 billion beat the Zacks Consensus Estimate of $3.22 billion by 1.3%. Revenues also grew 15% year over year as the homebuilding, financial services and multi-family segments performed significantly well.

Lennar Corporation Price, Consensus and EPS Surprise

Lennar Corporation Price, Consensus and EPS Surprise | Lennar Corporation Quote

Segment Details

Homebuilding: Segment revenues increased 15.5% year over year to $2.89 billion, driven by higher number of homes delivered. Within this, home sales constituted $2.85 billion (up 16.6% year over year) and land sales accounted for $37.5 million (down 30%).

New home orders increased 8% year over year to 7,610 in the fiscal third quarter. The potential value of net orders increased 14% year over year to $2.9 billion.

Home deliveries increased 12% year over year to 7,598, buoyed by higher number of homes delivered across all homebuilding segments, barring Central.

The average selling price (ASP) of homes delivered was $376,000, reflecting an increase of 3.6% year over year.

In the quarter under review, backlog grew 10% year over year to 10,212 homes. Potential housing revenues from backlog increased 18% year over year to $4.1 billion.

Margins

Gross margin on home sales improved 20 basis points (bps) to 22.8%. This was because insurance recoveries of $10.3 million positively impacted gross margin by 30 bps.

As a percentage of home sales, SG&A (selling, general and administrative) expenses declined 10 bps to 9.2% from 9.3% a year ago. The improvement was due to enhanced operating leverage as a result of an increase in home deliveries.

Financial Services: Financial Services revenues increased 12.3% to $215.1 million in the quarter. Operating earnings at the segment were $49.1 million, down from $53.2 million a year ago.

Rialto Investments: Rialto Investments’ revenues of $57.8 million decreased 9.5% year over year. The segment reported operating loss of $3.2 million in the quarter.

Lennar Multi-Family: Lennar Multi-Family revenues of $103.4 million increased 26.7% in the reported quarter from $81.6 million in the prior-year quarter.

The segment’s operating income was $9.1 million in the third quarter against $2.6 million in the year-ago quarter.

Financials

Lennar Homebuilding’s cash and cash equivalents totaled $564.6 million as of Aug 31, 2017, down from $1,050.2 million as of Nov 30, 2016. Net Lennar Homebuilding debt was $4.96 billion as of Aug 31, 2017 compared with $3.53 billion as of Nov 30, 2016.

Zacks Rank & Other Key Picks

Lennar currently carries a Zacks Rank #3 (Hold).

A few other favorably-ranked stocks in the construction sector are Persimmon Plc (PSMMY - Free Report), D.R. Horton, Inc. (DHI - Free Report) and Beazer Homes USA, Inc. (BZH - Free Report) .

Persimmon sports a Zacks Rank #1 (Strong Buy) and is likely to witness a 18.3% rise in earnings. You can see the complete list of today’s Zacks #1 Rank stocks here.

D.R. Horton, a Zacks Rank #2 stock, is expected to exhibit 17% growth in 2017 earnings.

KB Home, also a Zacks Rank #2 stock, is expected to witness 53.5% growth in fiscal 2018 earnings.