Lennar Corp , the third-largest U.S. homebuilder, reported quarterly results that beat Wall Street estimates and said it expected a profitable 2011, boosting its own shares and those of its rivals.

Shares of the Miami-based builder, which has operations in 14 states, were up 8 percent in mid-day trading after Chief Executive Officer Stuart Miller told analysts Lennar will make a profit next year whether or not the economy strengthens.

We're not anticipating improvement in the marketplace, Miller said. We think that we can remain profitable with solid gross margins.

During its fourth quarter, Lennar gained marketshare, cut administrative and manufacturing costs and saw Rialto, its new distressed land investment business, account for $12.4 million, or 39 percent, of the bottom line.

These guys have their act together, said Morningstar analyst Mike Gaiden.

Lennar is doing a better job than its rivals of finding and building in communities where people want to live, Gaiden said, enabling it come much closer to transcending the lackluster economy and stubbornly high unemployment.

Rialto also gives Lennar an inside track for its own homebuilding business on land deals that have not yet hit the market, the company said.

New orders fell only 5 percent to 2,520 homes. Last Friday, competitor KB Home reported a 25 percent drop in orders, in line with the industry average.

Gaiden expects the Rialto division to add between 25 cents and 50 cents to 2011 earnings per share.

Homebuilder confidence remains stuck at historic lows, according to the National Association of Home Builders/Wells Fargo Housing Market Index, which stood at 16 in December. A reading above 50 indicates that more builders view sales conditions as being good than poor. The index has not been above 50 since April 2006. [nN15135409]

But Lennar's performance pulled competitors' shares higher as well. The Dow Jones U.S. Home Construction Index <.DJUSHB> was up about 3 percent, compared with a 0.5 percent increase in the broader market as measured by the S&P 500 <.SPX>.

Miller said the housing recovery will be inconsistent and uneven but that he sees early signs of stabilization in some markets.

The company was able to reduce sales incentives offered to homebuilders to $32,800 per home from $44,800 per home last year. For a graphic, click: http://r.reuters.com/wuk75r

Lennar continue to boast the highest margins in the industry thanks to its efficient operations and re-engineered products, wrote Raymond James analyst Buck Horne in a client note.

Lennar reported earnings of $32 million, or 17 cents per share, for the quarter that ended November 30, compared with $35.6 million, or 19 cents per share, a year ago.

Analysts on average had forecast fiscal fourth-quarter earnings of 3 cents per share, according to Thomson Reuters


The year-earlier quarter included a $320.5 million tax benefit, the company said.

Revenue fell 6 percent to $860.1 million.

Lennar's shares were up 8 percent at $20.40 in midday trading on the New York Stock Exchange.

(Reporting by Helen Chernikoff, editing by Dave Zimmerman)