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In the last reported quarter, its earnings topped the Zacks Consensus Estimate by 7.9% and grew 71% from the year-ago period. The company's earnings topped analysts’ expectations in 23 of the trailing 24 quarters. Yet, its top line missed the consensus mark by 2.4% in the last reported quarter but improved 40% year over year.
Trend in Estimate Revision
For the quarter to be reported, the Zacks Consensus Estimate for the bottom line has remained stable over the past 60 days at $1.52 per share. This indicates a 49% increase from the year-ago earnings of $1.02 per share. The consensus estimate for revenues is pegged at $1.49 billion, suggesting a rise of 30.1% from the prior-year quarter.
Revenues: KB Home’s housing revenues are expected to have improved in the fiscal first quarter from the year-ago level, given resilient housing market conditions in the United States backed by the lack of available supply and a highly motivated buyer.
The Zacks Consensus Estimate for the company’s Homebuilding revenues — including housing and land — is pegged at $1,482 million, which indicates an increase of 30.2% from the year-ago period. Within Homebuilding, the consensus mark for housing revenues is $1,481 million, indicating a rise of 30.3% from the prior-year period. The same for land revenues is pegged at $1.5 million, indicating an increase from $0.66 million a year ago. It expects housing revenues in the range of $1.43-$1.53 billion.
Higher pricing is expected to have been a major contributing factor. The consensus estimate for average selling price is $472K, indicating growth from $397K reported a year ago. For the quarter, the company expects an average selling price of $472K.
The consensus estimate for homes delivered is pegged at 3,137 units, suggesting growth of 9.5% from the year-ago level.
Orders & Backlogs: A solid backlog level, which is a key indicator of significant growth opportunities, is likely to have been a positive. The consensus estimate for backlog is 11,446 units, implying notable growth from 9,238 units reported in the prior year.
Yet, the consensus mark for new orders is currently pegged at 4,039 units, suggesting a 5.9% year-over-year decline.
Margins: Higher average sales and strong demand are likely to have expanded margins in the to-be-reported quarter. Although higher material and labor costs are likely to have put pressure on the bottom line, its initiatives like the Returns-Focused Growth Plan, Built-to-Order approach, and aggressive investments in land acquisition as well as development are likely to have somewhat offset those headwinds.
The company expects homebuilding operating income margin (excluding the impact of any inventory-related charges) to improve 12% for the quarter, suggesting an increase from 10.4% a year ago. Assuming no inventory-related charges, KB Home expects fiscal fourth-quarter housing gross margin in the range of 22-22.6%. In the year-ago period, the metric was 21.1%. The SG&A expense ratio will be approximately 10.4%, suggesting an improvement of 30 basis points from 10.7% in the year-ago period.
What Our Model Indicates
Our proven model does not conclusively predict an earnings beat for KB Home this time around. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here. You can see the complete list of today’s Zacks #1 Rank stocks here.
Earnings ESP: The Earnings ESP for KB Home is 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: KB Home currently has a Zacks Rank #3.
Stocks With Favorable Combination
Here are some companies in the Zacks Construction sector, which according to our model have the right combination of elements to post an earnings beat for their respective quarters to be reported.
Floor & Decor Holdings, Inc. (FND - Free Report) has an Earnings ESP of +0.25% and holds a Zacks Rank #3.
Floor & Decor Holdings is expected to register a 2.9% decline in earnings for the quarter to be reported. FND reported better-than-expected earnings in three of the last four quarters but missed on one occasion, with the average surprise being 11.4%.
Quanta Services, Inc. (PWR - Free Report) has an Earnings ESP of +2.13% and a Zacks Rank #3.
Quanta is expected to register 62.7% growth in earnings for the quarter to be reported. The company reported better-than-expected earnings in all the last four quarters, with the average being 7%.
Watsco, Inc. (WSO - Free Report) has an Earnings ESP of +16.44% and a Zacks Rank #2.
Watsco is expected to register 20.9% growth in earnings for the quarter to be reported. The company reported better-than-expected earnings in the last four quarters, with the average being 22.7%.
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KB Home (KBH) to Report Q1 Earnings: Key Factors to Note
KB Home (KBH - Free Report) is slated to report first-quarter fiscal 2022 results (ended Feb 28) on Mar 23, after market close.
In the last reported quarter, its earnings topped the Zacks Consensus Estimate by 7.9% and grew 71% from the year-ago period. The company's earnings topped analysts’ expectations in 23 of the trailing 24 quarters. Yet, its top line missed the consensus mark by 2.4% in the last reported quarter but improved 40% year over year.
Trend in Estimate Revision
For the quarter to be reported, the Zacks Consensus Estimate for the bottom line has remained stable over the past 60 days at $1.52 per share. This indicates a 49% increase from the year-ago earnings of $1.02 per share. The consensus estimate for revenues is pegged at $1.49 billion, suggesting a rise of 30.1% from the prior-year quarter.
KB Home Price and EPS Surprise
KB Home price-eps-surprise | KB Home Quote
Factors at Play
Revenues: KB Home’s housing revenues are expected to have improved in the fiscal first quarter from the year-ago level, given resilient housing market conditions in the United States backed by the lack of available supply and a highly motivated buyer.
The Zacks Consensus Estimate for the company’s Homebuilding revenues — including housing and land — is pegged at $1,482 million, which indicates an increase of 30.2% from the year-ago period. Within Homebuilding, the consensus mark for housing revenues is $1,481 million, indicating a rise of 30.3% from the prior-year period. The same for land revenues is pegged at $1.5 million, indicating an increase from $0.66 million a year ago. It expects housing revenues in the range of $1.43-$1.53 billion.
Higher pricing is expected to have been a major contributing factor. The consensus estimate for average selling price is $472K, indicating growth from $397K reported a year ago. For the quarter, the company expects an average selling price of $472K.
The consensus estimate for homes delivered is pegged at 3,137 units, suggesting growth of 9.5% from the year-ago level.
Orders & Backlogs: A solid backlog level, which is a key indicator of significant growth opportunities, is likely to have been a positive. The consensus estimate for backlog is 11,446 units, implying notable growth from 9,238 units reported in the prior year.
Yet, the consensus mark for new orders is currently pegged at 4,039 units, suggesting a 5.9% year-over-year decline.
Margins: Higher average sales and strong demand are likely to have expanded margins in the to-be-reported quarter. Although higher material and labor costs are likely to have put pressure on the bottom line, its initiatives like the Returns-Focused Growth Plan, Built-to-Order approach, and aggressive investments in land acquisition as well as development are likely to have somewhat offset those headwinds.
The company expects homebuilding operating income margin (excluding the impact of any inventory-related charges) to improve 12% for the quarter, suggesting an increase from 10.4% a year ago. Assuming no inventory-related charges, KB Home expects fiscal fourth-quarter housing gross margin in the range of 22-22.6%. In the year-ago period, the metric was 21.1%. The SG&A expense ratio will be approximately 10.4%, suggesting an improvement of 30 basis points from 10.7% in the year-ago period.
What Our Model Indicates
Our proven model does not conclusively predict an earnings beat for KB Home this time around. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here. You can see the complete list of today’s Zacks #1 Rank stocks here.
Earnings ESP: The Earnings ESP for KB Home is 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: KB Home currently has a Zacks Rank #3.
Stocks With Favorable Combination
Here are some companies in the Zacks Construction sector, which according to our model have the right combination of elements to post an earnings beat for their respective quarters to be reported.
Floor & Decor Holdings, Inc. (FND - Free Report) has an Earnings ESP of +0.25% and holds a Zacks Rank #3.
Floor & Decor Holdings is expected to register a 2.9% decline in earnings for the quarter to be reported. FND reported better-than-expected earnings in three of the last four quarters but missed on one occasion, with the average surprise being 11.4%.
Quanta Services, Inc. (PWR - Free Report) has an Earnings ESP of +2.13% and a Zacks Rank #3.
Quanta is expected to register 62.7% growth in earnings for the quarter to be reported. The company reported better-than-expected earnings in all the last four quarters, with the average being 7%.
Watsco, Inc. (WSO - Free Report) has an Earnings ESP of +16.44% and a Zacks Rank #2.
Watsco is expected to register 20.9% growth in earnings for the quarter to be reported. The company reported better-than-expected earnings in the last four quarters, with the average being 22.7%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.