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KB Home (KBH - Free Report) reported mixed results for first-quarter fiscal 2021. Earnings surpassed the Zacks Consensus Estimate. However, revenues missed the same. Following the earnings release, the company’s shares dropped 2.9% in the after-market trading session on Mar 24.
Earnings & Revenue Discussion
KB Home reported quarterly earnings of $1.02 per share, which surpassed the consensus estimate of 87 cents by 17.2%. Also, the metric grew 61.9% from the year-ago figure of 63 cents per share.
Total revenues of $1,141.7 million missed the consensus mark of $1,210 million by 5.3%. Nonetheless, revenues grew 6.1% on a year-over-year basis.
Homebuilding: For the quarter under review, the segment's revenues of $1,138 million increased 6.1% from the prior-year period.
The number of homes delivered grew 4.1% from the year-ago level to 2,864 units, marking the highest first-quarter level since 2008. Further, average selling price or ASP increased 2% from a year ago to $397,100.
Net orders increased 23% from the prior-year quarter to 4,292 homes, marking the highest first-quarter level in 14 years. Moreover, value of net orders rose 35% from the year-ago quarter to $1.87 billion.
For the reported quarter, average community count was down 11% from a year ago to 223. Quarter-end community count was 209, down 16% from the prior year. Net orders per community averaged 6.4 per month, up 39% compared with 4.6 a year ago.
Cancellation rate, as a percentage of gross orders, reduced to 10% from 14% reported a year ago. Its quarter-end backlog totaled 9,238 homes (as of Feb 28, 2021), up 58.7% from a year ago. Further, potential housing revenues from backlog grew 74% from the prior-year period to $3.69 billion.
Margins
Within homebuilding, housing gross margin (excluding inventory-related charges) improved 320 basis points (bps) year over year to 21.1%. The increase was attributed to a favorable pricing environment due to robust housing market demand, increased operating leverage due to higher revenues and lower amortization of previously capitalized interest.
As a percentage of housing revenues, selling, general and administrative expenses improved 110 bps from the year-ago figure to 10.7% due to reduced overhead costs, lower advertising costs, partly reflecting the strong housing demand and increased operating leverage from higher revenues.
Financial Services revenues rose 5% year over year to $3,730 million. Pretax income of $8.5 million was up from $5.8 million a year ago, mainly reflecting higher income from its mortgage banking joint venture, KBHS Home Loans, LLC.
Financial Position
KB Home had cash and cash equivalents of $569.8 million as of Feb 28, 2021, down from $681.2 million on Nov 30, 2020. The company had total liquidity of $1.36 billion, including $787.6 million of available capacity under the unsecured revolving credit facility.
Inventories increased 6% from Nov 30, 2020, to $4.12 billion at the end of first-quarter fiscal 2021.
Its debt to capital was 38.9% at the year-end, down from 39.6% as of Nov 30, 2020, (marking an improvement of 70 bps).
Zacks Rank
Currently, KB Home carries a Zacks Rank #3 (Hold).
Toll Brothers, D.R. Horton and Lennar’s fiscal 2021 earnings are expected to rise 47.4%, 42.9% and 39.9%, respectively.
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KB Home (KBH) Q1 Earnings Beat, Revenues Miss, Orders Rise 23%
KB Home (KBH - Free Report) reported mixed results for first-quarter fiscal 2021. Earnings surpassed the Zacks Consensus Estimate. However, revenues missed the same. Following the earnings release, the company’s shares dropped 2.9% in the after-market trading session on Mar 24.
Earnings & Revenue Discussion
KB Home reported quarterly earnings of $1.02 per share, which surpassed the consensus estimate of 87 cents by 17.2%. Also, the metric grew 61.9% from the year-ago figure of 63 cents per share.
Total revenues of $1,141.7 million missed the consensus mark of $1,210 million by 5.3%. Nonetheless, revenues grew 6.1% on a year-over-year basis.
KB Home Price, Consensus and EPS Surprise
KB Home price-consensus-eps-surprise-chart | KB Home Quote
Segment Details
Homebuilding: For the quarter under review, the segment's revenues of $1,138 million increased 6.1% from the prior-year period.
The number of homes delivered grew 4.1% from the year-ago level to 2,864 units, marking the highest first-quarter level since 2008. Further, average selling price or ASP increased 2% from a year ago to $397,100.
Net orders increased 23% from the prior-year quarter to 4,292 homes, marking the highest first-quarter level in 14 years. Moreover, value of net orders rose 35% from the year-ago quarter to $1.87 billion.
For the reported quarter, average community count was down 11% from a year ago to 223. Quarter-end community count was 209, down 16% from the prior year. Net orders per community averaged 6.4 per month, up 39% compared with 4.6 a year ago.
Cancellation rate, as a percentage of gross orders, reduced to 10% from 14% reported a year ago. Its quarter-end backlog totaled 9,238 homes (as of Feb 28, 2021), up 58.7% from a year ago. Further, potential housing revenues from backlog grew 74% from the prior-year period to $3.69 billion.
Margins
Within homebuilding, housing gross margin (excluding inventory-related charges) improved 320 basis points (bps) year over year to 21.1%. The increase was attributed to a favorable pricing environment due to robust housing market demand, increased operating leverage due to higher revenues and lower amortization of previously capitalized interest.
As a percentage of housing revenues, selling, general and administrative expenses improved 110 bps from the year-ago figure to 10.7% due to reduced overhead costs, lower advertising costs, partly reflecting the strong housing demand and increased operating leverage from higher revenues.
Homebuilding operating margin (excluding inventory-related charges) increased 430 bps to 10.4%.
Financial Services revenues rose 5% year over year to $3,730 million. Pretax income of $8.5 million was up from $5.8 million a year ago, mainly reflecting higher income from its mortgage banking joint venture, KBHS Home Loans, LLC.
Financial Position
KB Home had cash and cash equivalents of $569.8 million as of Feb 28, 2021, down from $681.2 million on Nov 30, 2020. The company had total liquidity of $1.36 billion, including $787.6 million of available capacity under the unsecured revolving credit facility.
Inventories increased 6% from Nov 30, 2020, to $4.12 billion at the end of first-quarter fiscal 2021.
Its debt to capital was 38.9% at the year-end, down from 39.6% as of Nov 30, 2020, (marking an improvement of 70 bps).
Zacks Rank
Currently, KB Home carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Zacks Building Products - Home Builders industry include D.R. Horton, Inc. (DHI - Free Report) , Lennar Corporation (LEN - Free Report) and Toll Brothers, Inc. (TOL - Free Report) , each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Toll Brothers, D.R. Horton and Lennar’s fiscal 2021 earnings are expected to rise 47.4%, 42.9% and 39.9%, respectively.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>