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In the last reported quarter, its earnings topped the Zacks Consensus Estimate by 17.8% and rose 55% from the year-ago quarter’s levels. The top line surpassed the consensus mark by 7.1% in the last reported quarter and increased 19% year over year.
The company's earnings topped analysts’ expectations in 25 of the trailing 28 quarters.
Trend in Estimate Revision
For the quarter to be reported, the Zacks Consensus Estimate for the bottom line has remained unchanged over the past 60 days at $2.67 per share. The projected figure indicates a 62.8% increase from the year-ago quarter’s earnings of $1.64 per share. The consensus estimate for revenues is pegged at $1.86 billion, suggesting a rise of 26.8% from the prior-year quarter’s levels.
Revenues: KB Home’s housing revenues are expected to have increased in the fiscal third quarter from the year-ago quarter’s levels, given the robust backlog level. Also, a solid return-focused growth model is likely to have aided growth.
The Zacks Consensus Estimate for the company’s Homebuilding revenues — including housing and land — is pegged at $1,863 million, indicating an increase of 27.4% from the year-ago period’s levels. Within Homebuilding, the consensus mark for housing revenues is pegged at $1,860 million, calling for a rise of 27.2% from the prior-year quarter’s tally. The same for land revenues is pegged at $3.3 million, indicating an increase from $0.25 million in the year-ago quarter. It expects housing revenues in the range of $1.82-$1.92 billion.
Higher pricing is expected to have been a major contributing factor. The consensus estimate for the average selling price is $494,000, indicating growth from $427,000 reported a year ago. For the quarter, the company expects an average selling price of $495,000.
The consensus estimate for homes delivered is pegged at 3,766 units, suggesting a rise from the year-ago quarter’s level of 3,425 units.
Orders & Backlogs: A solid backlog level, a key indicator of significant growth opportunities, is likely to have been a positive. The consensus estimate for the backlog is 12,245 units, implying notable growth from 10,694 units reported in the prior year.
Yet, the consensus mark for new orders is currently pegged at 3,680 units, suggesting a year-over-year decline from 4,085 units, given the ongoing affordability issues and higher mortgage rates in the industry.
Margins: Higher average prices 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, initiatives like the Returns-Focused Growth Plan and Built-to-Order approach are likely to have somewhat offset those headwinds.
The company expects the homebuilding operating income margin (excluding the impact of any inventory-related charges) to improve to 16.9% for the quarter, suggesting an increase from 11.6% a year ago.
Assuming no inventory-related charges, KB Home expects fiscal third-quarter housing gross margin in the range of 26.5%. In the year-ago period, the metric was 22%. The SG&A expense ratio will be 9.6% of housing revenues compared with 9.9% reported 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 the Favorable Combination
Here are some companies in the Zacks Construction sector, according to our model, have the right combination of elements to post an earnings beat for their respective quarters to be reported.
Acuity Brands, Inc. (AYI - Free Report) has an Earnings ESP of +5.08% and carries a Zacks Rank #3.
AYI is expected to register 2.5% growth in earnings for the quarter to be reported. AYI reported better-than-expected earnings in all of the last four quarters, with the average surprise being 15.7%.
Dream Finders Homes, Inc. (DFH - Free Report) has an Earnings ESP of +11.43% and a Zacks Rank #3.
Dream Finders is expected to register 250% growth in earnings for the quarter to be reported. The company reported better-than-expected earnings in three of the last four quarters and missed on one occasion, with a negative surprise of 2.4%, on average.
TopBuild Corp. (BLD - Free Report) has an Earnings ESP of +7.54% and a Zacks Rank #3.
BLD is expected to register 38.6% growth in earnings for the quarter to be reported. The company reported better-than-expected earnings in three of the last four quarters and missed on one occasion, with the average being 10.4%.
Image: Bigstock
KB Home (KBH) to Report Q3 Earnings: What's in Store?
KB Home (KBH - Free Report) is slated to report third-quarter fiscal 2022 results (ended Aug 31) on Sep 21, after market close.
In the last reported quarter, its earnings topped the Zacks Consensus Estimate by 17.8% and rose 55% from the year-ago quarter’s levels. The top line surpassed the consensus mark by 7.1% in the last reported quarter and increased 19% year over year.
The company's earnings topped analysts’ expectations in 25 of the trailing 28 quarters.
Trend in Estimate Revision
For the quarter to be reported, the Zacks Consensus Estimate for the bottom line has remained unchanged over the past 60 days at $2.67 per share. The projected figure indicates a 62.8% increase from the year-ago quarter’s earnings of $1.64 per share. The consensus estimate for revenues is pegged at $1.86 billion, suggesting a rise of 26.8% from the prior-year quarter’s levels.
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 increased in the fiscal third quarter from the year-ago quarter’s levels, given the robust backlog level. Also, a solid return-focused growth model is likely to have aided growth.
The Zacks Consensus Estimate for the company’s Homebuilding revenues — including housing and land — is pegged at $1,863 million, indicating an increase of 27.4% from the year-ago period’s levels. Within Homebuilding, the consensus mark for housing revenues is pegged at $1,860 million, calling for a rise of 27.2% from the prior-year quarter’s tally. The same for land revenues is pegged at $3.3 million, indicating an increase from $0.25 million in the year-ago quarter. It expects housing revenues in the range of $1.82-$1.92 billion.
Higher pricing is expected to have been a major contributing factor. The consensus estimate for the average selling price is $494,000, indicating growth from $427,000 reported a year ago. For the quarter, the company expects an average selling price of $495,000.
The consensus estimate for homes delivered is pegged at 3,766 units, suggesting a rise from the year-ago quarter’s level of 3,425 units.
Orders & Backlogs: A solid backlog level, a key indicator of significant growth opportunities, is likely to have been a positive. The consensus estimate for the backlog is 12,245 units, implying notable growth from 10,694 units reported in the prior year.
Yet, the consensus mark for new orders is currently pegged at 3,680 units, suggesting a year-over-year decline from 4,085 units, given the ongoing affordability issues and higher mortgage rates in the industry.
Margins: Higher average prices 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, initiatives like the Returns-Focused Growth Plan and Built-to-Order approach are likely to have somewhat offset those headwinds.
The company expects the homebuilding operating income margin (excluding the impact of any inventory-related charges) to improve to 16.9% for the quarter, suggesting an increase from 11.6% a year ago.
Assuming no inventory-related charges, KB Home expects fiscal third-quarter housing gross margin in the range of 26.5%. In the year-ago period, the metric was 22%. The SG&A expense ratio will be 9.6% of housing revenues compared with 9.9% reported 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 the Favorable Combination
Here are some companies in the Zacks Construction sector, according to our model, have the right combination of elements to post an earnings beat for their respective quarters to be reported.
Acuity Brands, Inc. (AYI - Free Report) has an Earnings ESP of +5.08% and carries a Zacks Rank #3.
AYI is expected to register 2.5% growth in earnings for the quarter to be reported. AYI reported better-than-expected earnings in all of the last four quarters, with the average surprise being 15.7%.
Dream Finders Homes, Inc. (DFH - Free Report) has an Earnings ESP of +11.43% and a Zacks Rank #3.
Dream Finders is expected to register 250% growth in earnings for the quarter to be reported. The company reported better-than-expected earnings in three of the last four quarters and missed on one occasion, with a negative surprise of 2.4%, on average.
TopBuild Corp. (BLD - Free Report) has an Earnings ESP of +7.54% and a Zacks Rank #3.
BLD is expected to register 38.6% growth in earnings for the quarter to be reported. The company reported better-than-expected earnings in three of the last four quarters and missed on one occasion, with the average being 10.4%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.