We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
In the last reported quarter, its earnings and revenues missed the Zacks Consensus Estimate by 13.3% and 2.8%, respectively. On a year-over-year basis, both metrics increased on the back of measures undertaken to stimulate additional sales during the seasonally slower time frame.
The company's earnings topped analysts’ expectations in 25 of the trailing 28 quarters.
For the quarter to be reported, the Zacks Consensus Estimate for earnings has declined to $1.05 per share from $1.10 in the past 30 days. The projected figure indicates a 28.6% decrease from the year-ago quarter’s earnings of $1.47 per share. The consensus estimate for revenues is pegged at $1.31 billion, suggesting a rise of 6.6% from the prior-year quarter’s reported level.
Factors at Play
Revenues: KB Home’s housing revenues are expected to have decreased in the fiscal first quarter from a year ago, thanks to high mortgage rates, persistent inflation and the uncertain economy.
Owing to a softer demand environment due to challenging macroeconomic and geopolitical conditions, the company expects housing revenues of $1.25-$1.40 billion, whereas it reported $1.39 billion in the year-ago quarter. KBH anticipates the average selling price or ASP to be $490,000-$500,000, whereas it reported $486,100 a year ago. The company expects average community count improvement of 15-20%.
We expect housing revenues to decrease 7.4% year over year to $1,290.4 million in the quarter. We expect ASP to increase 0.9% to $490,600 in the quarter.
We expect home deliveries to be 2,630 units, suggesting a decline from the year-ago quarter’s reported level of 2,868 units.
Margins: Although higher material and labor costs are likely to have put pressure on the bottom line, higher ASP is likely to have expanded margins in the to-be-reported quarter. Also, 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 margin (assuming no inventory-related charges) between 9.5% and 10.5%. This compares unfavorably with the year-ago reported figure of 12.2%.
Assuming no inventory-related charges, KB Home expects the fiscal first-quarter housing gross margin to be 20-21%, whereas it reported 21.1% a year ago. Selling, General and Administrative expenses, as a percentage of housing revenues, are likely to be 10.3-10.8% (suggesting a rise from the year-ago reported figure of 10.2%). It projects an effective tax rate of 23%.
Orders & Backlogs: We expect the backlog to be 6,432 units, implying a notable fall from 11,886 units reported in the prior year. Also, new orders are expected to decline 66.7% to 1,400 units, given the ongoing affordability issues and higher mortgage rates in the industry.
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 -12.52%. 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.
TopBuild Corp. (BLD - Free Report) has an Earnings ESP of +1.13% and a Zacks Rank #3.
BLD is expected to register 16% growth in earnings for the to-be-reported quarter. Notably, BLD reported better-than-expected earnings in all the last four quarters, the average surprise being 16.8%.
Martin Marietta Materials, Inc. (MLM - Free Report) has an Earnings ESP of +0.43% and a Zacks Rank #3.
MLM’s earnings for the to-be-reported quarter are expected to grow 153.9%. The company reported better-than-expected earnings in two of the last four quarters and missed on other two occasions, the average negative surprise being 9.8%.
Patrick Industries, Inc. (PATK - Free Report) has an Earnings ESP of +10.41% and a Zacks Rank #3.
PATK’s earnings for the to-be-reported quarter are expected to decline 75.6%. The company reported better-than-expected earnings in all the last four quarters, the average surprise being 34.8%.
Image: Bigstock
Here's What to Expect From KB Home's (KBH) Earnings in Q1
KB Home (KBH - Free Report) is slated to report first-quarter fiscal 2023 results (ended Feb 28) on Mar 22, after market close.
In the last reported quarter, its earnings and revenues missed the Zacks Consensus Estimate by 13.3% and 2.8%, respectively. On a year-over-year basis, both metrics increased on the back of measures undertaken to stimulate additional sales during the seasonally slower time frame.
The company's earnings topped analysts’ expectations in 25 of the trailing 28 quarters.
KB Home Price and EPS Surprise
KB Home price-eps-surprise | KB Home Quote
Trend in Estimate Revision
For the quarter to be reported, the Zacks Consensus Estimate for earnings has declined to $1.05 per share from $1.10 in the past 30 days. The projected figure indicates a 28.6% decrease from the year-ago quarter’s earnings of $1.47 per share. The consensus estimate for revenues is pegged at $1.31 billion, suggesting a rise of 6.6% from the prior-year quarter’s reported level.
Factors at Play
Revenues: KB Home’s housing revenues are expected to have decreased in the fiscal first quarter from a year ago, thanks to high mortgage rates, persistent inflation and the uncertain economy.
Owing to a softer demand environment due to challenging macroeconomic and geopolitical conditions, the company expects housing revenues of $1.25-$1.40 billion, whereas it reported $1.39 billion in the year-ago quarter. KBH anticipates the average selling price or ASP to be $490,000-$500,000, whereas it reported $486,100 a year ago. The company expects average community count improvement of 15-20%.
We expect housing revenues to decrease 7.4% year over year to $1,290.4 million in the quarter. We expect ASP to increase 0.9% to $490,600 in the quarter.
We expect home deliveries to be 2,630 units, suggesting a decline from the year-ago quarter’s reported level of 2,868 units.
Margins: Although higher material and labor costs are likely to have put pressure on the bottom line, higher ASP is likely to have expanded margins in the to-be-reported quarter. Also, 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 margin (assuming no inventory-related charges) between 9.5% and 10.5%. This compares unfavorably with the year-ago reported figure of 12.2%.
Assuming no inventory-related charges, KB Home expects the fiscal first-quarter housing gross margin to be 20-21%, whereas it reported 21.1% a year ago. Selling, General and Administrative expenses, as a percentage of housing revenues, are likely to be 10.3-10.8% (suggesting a rise from the year-ago reported figure of 10.2%). It projects an effective tax rate of 23%.
Orders & Backlogs: We expect the backlog to be 6,432 units, implying a notable fall from 11,886 units reported in the prior year. Also, new orders are expected to decline 66.7% to 1,400 units, given the ongoing affordability issues and higher mortgage rates in the industry.
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 -12.52%. 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.
TopBuild Corp. (BLD - Free Report) has an Earnings ESP of +1.13% and a Zacks Rank #3.
BLD is expected to register 16% growth in earnings for the to-be-reported quarter. Notably, BLD reported better-than-expected earnings in all the last four quarters, the average surprise being 16.8%.
Martin Marietta Materials, Inc. (MLM - Free Report) has an Earnings ESP of +0.43% and a Zacks Rank #3.
MLM’s earnings for the to-be-reported quarter are expected to grow 153.9%. The company reported better-than-expected earnings in two of the last four quarters and missed on other two occasions, the average negative surprise being 9.8%.
Patrick Industries, Inc. (PATK - Free Report) has an Earnings ESP of +10.41% and a Zacks Rank #3.
PATK’s earnings for the to-be-reported quarter are expected to decline 75.6%. The company reported better-than-expected earnings in all the last four quarters, the average surprise being 34.8%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.