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KB Home (KBH) on Expansion Spree, Opens Community in California

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KB Home (KBH - Free Report) has been successfully executing its core business strategy, KB2020, which comprises of boosting scale in its existing geographic footprint. In line with this plan, KB Home recently announced the opening of Concord, a new home community in the city of Ontario Ranch, CA.

Concord offers its homebuyers highly planned resort-style amenities, open kitchens, master bedrooms with walk-in closets and huge storage areas. The community is well connected with the area’s major employment centers. Concord is also situated very close to the shopping, dining and entertainment centres at Victoria Gardens, Eastvale Gateway and Ontario’s downtown district.

In this regard, John Fenn, president of KB Home’s Inland Empire division, said, "As with other KB Home communities, Concord provides home shoppers the opportunity to purchase a new KB home that can be personalized to reflect their lifestyle and needs."

KB Home is one of the largest and most recognized homebuilders in the United States. With the addition of these new communities, the company now operates in 45 markets across eight states and serves a wide range of buyer groups. KB Home is the first builder to make every home ENERGY STAR® certified.

Focus on Community Openings

KB home has a robust backlog level, a strong line-up of community openings and a solid return-focused growth model. Backed by these factors, it has the potential of generating $5.9-$6.1 billion in housing revenues and operating margin in the range of 11.5-12% this year. The company invests aggressively in land acquisition and development, mainly in high-end locations, which is critical for community count as well as top-line growth. The company has a strong land pipeline, and thus expects double-digit year-over-year growth in community count in 2022 to support market share gains and housing revenue growth.

Backlog at the end of second-quarter fiscal 2021 totaled 10,034 homes (as of May 31, 2021), up 98% year over year. Further, potential housing revenues from backlog grew 126% from the prior-year period to $4.29 billion.

Share Performance

KB Home shares have surged 20.5% so far this year compared with the Zacks Building Products - Home Builders industry’s 20% growth. Also, the company’s earnings estimates for fiscal 2021 have moved up 5.1% over the past 30 days, depicting analysts' optimism on  its bottom-line growth potential. This faith is backed by the company’s robust performance and accretive increase in store count.

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Zacks Rank and Other Stocks to Consider

KB Home currently carries a Zacks Rank #2 (Buy). Some other top-ranked stocks in the same space include Lennar Corporation (LEN - Free Report) , Toll Brothers, Inc. (TOL - Free Report) and Dream Finders Homes, Inc. (DFH - Free Report) in the Zacks Building Products - Home Builders industry. Lennar and Toll Brothers sport a Zacks Rank #1 (Strong Buy) each. Dream Finders has a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Lennar’s and Toll Brothers’ earnings for fiscal 2021 are expected to surge 73.4% and 68.8%, respectively.

Dream Finders Homes’ earnings for 2022 are expected to surge 34.6%.

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