Analysts expected Lennar’s summer orders to grow around 15% year-over-year for the third quarter, which ended on Aug. 31. The Miami-based behemoth only saw 10.3% order growth and 4.0% average order price.

But analysts still declared the quarter, which saw Lennar spin out its California master plan business and rental business, a success overall, mainly on the strength of 24.1% gross margins.

“Despite the modestly lower orders, we view the results as strong and modestly above our projections on stronger-than-expected margins,” says Jade Rahmani of Keefe, Bruyette & Woods.

Lennar’s home building revenues, which increased 22% year-over-year, also pleased The Street. UBS’s Maklari projected 13% growth. Higher land costs did pull margins down from last year’s 25.2%, however.

While orders came in below expectations, analyst explained that Lennar was working off of a high bar, 23% was the 2014 number to beat. Maklari said the builder enjoyed growth “in all regions with the exception of Houston (down 12%), as that market continues to deal with weather-related delays earlier in the year.”

Here are some other highlights from the country’s second-largest home builder (compared to 3Q 2014):

  • Net earnings of $223.3 million, or $0.96 per diluted share, compared to net earnings of $177.8 million, or $0.78 per diluted share
  • Deliveries of 6,318 homes – up 16%
  • New orders of 6,495 homes – up 10%; new orders dollar value of $2.3 billion – up 20%
  • Backlog of 8,250 homes – up 13%; backlog dollar value of $3.0 billion – up 22%
  • Revenues of $2.5 billion – up 24%
  • Lennar Home building operating earnings of $333.7 million, compared to $261.9 million – up 27%
  • S,G&A expenses as a % of revenues from home sales improved to 9.9%, compared to 10.4% in Q3 2014 and 10.0% in Q2 2015
  • Operating margin on home sales of 14.1%, compared to 14.8% in Q3 2014, improved sequentially 30 basis points from Q2 2015

Going forward, analysts are high on Lennar. “We continue to believe Lennar is among the best positioned builders, given management's: acumen at working through complex transactions, efforts to effectively cut costs and simplify the business, and pursuit of investments outside the core home building operations,” Maklari wrote. 

Rahmani agrees. “We continue to believe Lennar's strong homebuilding operations, unique land sourcing, and potential for value creation through ancillary businesses justify a premium valuation,” he wrote.