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KB Home (KBH) Net Orders Jump 155% QTD, Backlog Gets a Boost
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KB Home (KBH - Free Report) has been gaining strength from solid momentum of the U.S. housing market, as is evident from the recent order trends. Recently, it reported preliminary quarter-to-date net orders for the second quarter of fiscal 2021.
KB Home’s net orders were 3,961 through May 21, 2021, representing an increase of 155% year over year. Notably, net orders were adversely impacted in the year-ago period owing to the COVID-19 pandemic outbreak.
Fiscal 2021 Looks Bright
Given robust backlog level, a strong lineup of community openings and solid return-focused growth model, KB Home is poised to perform well in fiscal 2021. This Los Angeles, CA-based homebuilder has the potential of generating $5.7-$6.1 billion in housing revenues and operating margin in the range of 11-11.8% this year. Backlog at the end of first-quarter fiscal 2021 (Feb 28, 2021) totaled 9,238 homes, up 58.7% from a year ago. Potential housing revenues from backlog also grew 74% from the prior-year period to $3.69 billion.
It is worth mentioning that the company’s built-to-order homes (which represented more than 70% of fiscal first-quarter net orders) provide it with higher revenues from premiums (lots, plans, and elevations) as well as design studio and structural options. Owing to this model, net order growth for first-quarter fiscal 2020 led to a 35% year-over-year increase in net order value, which in turn fueled the expansion of backlog value to $3.69 billion, reflecting a 58.7% year-over-year rise on roughly 9,238 units. Owing to this higher backlog, the company is confident of generating increased revenues in fiscal 2021.
KB Home has been pursuing a Returns-Focused Growth Plan that is designed to drive revenues, homebuilding operating income margin, return on invested capital, return on equity and leverage ratio. The plan has helped KB Home to generate significant cash from operations of $6 billion (as of first-quarter fiscal 2021) over the past three years. Approximately 87% of this cash has been re-invested for future growth through land acquisitions and development.
Shares of KB Home — a Zacks Rank #1 (Strong Buy) stock — have advanced 37.6% so far this year, outperforming the Zacks Building Products - Home Builders industry’s 19.4% rally. Earnings estimates for the company’s current quarter have increased 5.8% to $1.28 per share over the past 60 days. The estimated figure indicates 132.7% year-over-year growth. You can see the complete list of today’s Zacks #1 Rank stocks here.
Importantly, revival of housing demand has been a boon for KB Home and companies like PulteGroup, Inc. (PHM - Free Report) , NVR, Inc. (NVR - Free Report) , D.R. Horton (DHI - Free Report) . Declining mortgage rates have been driving the U.S. residential market in recent times. Overall, the U.S. housing market seems to be back on track, defying headwinds like low inventory levels, tight lending conditions, and broad-based economic as well as public health risks associated with the pandemic.
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KB Home (KBH) Net Orders Jump 155% QTD, Backlog Gets a Boost
KB Home (KBH - Free Report) has been gaining strength from solid momentum of the U.S. housing market, as is evident from the recent order trends. Recently, it reported preliminary quarter-to-date net orders for the second quarter of fiscal 2021.
KB Home’s net orders were 3,961 through May 21, 2021, representing an increase of 155% year over year. Notably, net orders were adversely impacted in the year-ago period owing to the COVID-19 pandemic outbreak.
Fiscal 2021 Looks Bright
Given robust backlog level, a strong lineup of community openings and solid return-focused growth model, KB Home is poised to perform well in fiscal 2021. This Los Angeles, CA-based homebuilder has the potential of generating $5.7-$6.1 billion in housing revenues and operating margin in the range of 11-11.8% this year. Backlog at the end of first-quarter fiscal 2021 (Feb 28, 2021) totaled 9,238 homes, up 58.7% from a year ago. Potential housing revenues from backlog also grew 74% from the prior-year period to $3.69 billion.
It is worth mentioning that the company’s built-to-order homes (which represented more than 70% of fiscal first-quarter net orders) provide it with higher revenues from premiums (lots, plans, and elevations) as well as design studio and structural options. Owing to this model, net order growth for first-quarter fiscal 2020 led to a 35% year-over-year increase in net order value, which in turn fueled the expansion of backlog value to $3.69 billion, reflecting a 58.7% year-over-year rise on roughly 9,238 units. Owing to this higher backlog, the company is confident of generating increased revenues in fiscal 2021.
KB Home has been pursuing a Returns-Focused Growth Plan that is designed to drive revenues, homebuilding operating income margin, return on invested capital, return on equity and leverage ratio. The plan has helped KB Home to generate significant cash from operations of $6 billion (as of first-quarter fiscal 2021) over the past three years. Approximately 87% of this cash has been re-invested for future growth through land acquisitions and development.
Shares of KB Home — a Zacks Rank #1 (Strong Buy) stock — have advanced 37.6% so far this year, outperforming the Zacks Building Products - Home Builders industry’s 19.4% rally. Earnings estimates for the company’s current quarter have increased 5.8% to $1.28 per share over the past 60 days. The estimated figure indicates 132.7% year-over-year growth. You can see the complete list of today’s Zacks #1 Rank stocks here.
Importantly, revival of housing demand has been a boon for KB Home and companies like PulteGroup, Inc. (PHM - Free Report) , NVR, Inc. (NVR - Free Report) , D.R. Horton (DHI - Free Report) . Declining mortgage rates have been driving the U.S. residential market in recent times. Overall, the U.S. housing market seems to be back on track, defying headwinds like low inventory levels, tight lending conditions, and broad-based economic as well as public health risks associated with the pandemic.
Bitcoin, Like the Internet Itself, Could Change Everything
Blockchain and cryptocurrency have sparked one of the most exciting discussion topics of a generation. Some call it the “Internet of Money” and predict it could change the way money works forever. If true, it could do to banks what Netflix did to Blockbuster and Amazon did to Sears. Experts agree we’re still in the early stages of this technology, and as it grows, it will create several investing opportunities.
Zacks has just revealed 3 companies that can help investors capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly.
See 3 crypto-related stocks now >>