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In the last reported quarter, its earnings and revenues beat the Zacks Consensus Estimate by 30.4% and 8.9%, respectively. On a year-over-year basis, revenues and earnings decreased.
The company’s earnings topped analysts’ expectations in 28 of the trailing 31 quarters.
Trend in Estimate Revision
For the quarter to be reported, the Zacks Consensus Estimate for earnings has decreased to $1.67 per share from $1.69 over the past 60 days. The projected figure indicates a 32.4% decrease from the year-ago quarter’s earnings of $2.47 per share. The consensus estimate for revenues is pegged at $1.61 billion, suggesting a decline of 17.1% from the prior-year quarter’s levels.
Revenues: KB Home’s housing revenues are expected to have decreased in the fiscal fourth quarter from a year ago, thanks to tough year-over-year comparisons, given high mortgage rates.
Owing to a softer demand environment compared to a year-ago period due to a challenging macroeconomic environment, the company expects housing revenues in the range of $1.55-$1.65 billion compared with the year-ago figure of $1.93 billion. KBH anticipates the average selling price, or ASP, to be $486,000, suggesting a decline from $510,400 reported a year ago. The company expects an average community count improvement of approximately 9%.
We expect housing revenues to decrease 17.5% year over year to $1.59 billion in the quarter. We expect ASP to decrease 4.7% to $486,300 in the quarter.
We expect home deliveries to be 3,280 units, suggesting a decline from the year-ago quarter’s level of 3,786 units.
Margins: Although lower revenues, 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 margin to be 10.5%. This compares unfavorably with the year-ago figure of 15.8%.
Assuming no inventory-related charges, KB Home expects the fiscal fourth-quarter housing gross margin to be 20.5% versus 23.9% reported a year ago. Selling, General & Administrative expenses, as a percentage of housing revenues, are likely to be 10% (up from the year-ago figure of 8%). It projects an effective tax rate of approximately 24%.
Orders & Backlogs: We expect new orders to grow to 2,482 units from 692 units a year ago. Homebuyers are encountering a limited supply of pre-owned homes on the market, prompting them to shift their focus toward builders who have ramped up their construction efforts to meet this growing demand. KB Home, like other homebuilding companies, has been riding high on this tailwind despite the continuous challenges.
We expect the backlog to be 6,210 units, implying a notable fall from 7,662 units reported in the prior-year quarter.
What Our Model Indicates
Our proven model does not conclusively predict an earnings beat for KB Home this time around. This 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.
Earnings ESP: KB Home has an Earnings ESP of 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.
DFH is expected to register a 14.1% decline in earnings for the to-be-reported quarter. Notably, DFH reported better-than-expected earnings in three of the last four quarters and missed on another occasion, with the average surprise being 131.6%.
D.R. Horton (DHI - Free Report) has an Earnings ESP of +2.11% and a Zacks Rank #3.
DHI’s earnings for the to-be-reported quarter are expected to grow 4.7%. The company reported better-than-expected earnings in all the last four quarters, with the average surprise being 28.9%.
NVR, Inc. (NVR - Free Report) has an Earnings ESP of +0.79% and a Zacks Rank #3.
NVR’s earnings for the to-be-reported quarter are expected to decline 11.1%. The company reported better-than-expected earnings in all the last four quarters, with the average surprise being 14.6%.
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KB Home (KBH) to Report Q4 Earnings: What's in the Offing?
KB Home (KBH - Free Report) is slated to report fourth-quarter fiscal 2023 results (ended Nov 30) on Jan 10, after market close.
In the last reported quarter, its earnings and revenues beat the Zacks Consensus Estimate by 30.4% and 8.9%, respectively. On a year-over-year basis, revenues and earnings decreased.
The company’s earnings topped analysts’ expectations in 28 of the trailing 31 quarters.
Trend in Estimate Revision
For the quarter to be reported, the Zacks Consensus Estimate for earnings has decreased to $1.67 per share from $1.69 over the past 60 days. The projected figure indicates a 32.4% decrease from the year-ago quarter’s earnings of $2.47 per share. The consensus estimate for revenues is pegged at $1.61 billion, suggesting a decline of 17.1% 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 decreased in the fiscal fourth quarter from a year ago, thanks to tough year-over-year comparisons, given high mortgage rates.
Owing to a softer demand environment compared to a year-ago period due to a challenging macroeconomic environment, the company expects housing revenues in the range of $1.55-$1.65 billion compared with the year-ago figure of $1.93 billion. KBH anticipates the average selling price, or ASP, to be $486,000, suggesting a decline from $510,400 reported a year ago. The company expects an average community count improvement of approximately 9%.
We expect housing revenues to decrease 17.5% year over year to $1.59 billion in the quarter. We expect ASP to decrease 4.7% to $486,300 in the quarter.
We expect home deliveries to be 3,280 units, suggesting a decline from the year-ago quarter’s level of 3,786 units.
Margins: Although lower revenues, 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 margin to be 10.5%. This compares unfavorably with the year-ago figure of 15.8%.
Assuming no inventory-related charges, KB Home expects the fiscal fourth-quarter housing gross margin to be 20.5% versus 23.9% reported a year ago. Selling, General & Administrative expenses, as a percentage of housing revenues, are likely to be 10% (up from the year-ago figure of 8%). It projects an effective tax rate of approximately 24%.
Orders & Backlogs: We expect new orders to grow to 2,482 units from 692 units a year ago. Homebuyers are encountering a limited supply of pre-owned homes on the market, prompting them to shift their focus toward builders who have ramped up their construction efforts to meet this growing demand. KB Home, like other homebuilding companies, has been riding high on this tailwind despite the continuous challenges.
We expect the backlog to be 6,210 units, implying a notable fall from 7,662 units reported in the prior-year quarter.
What Our Model Indicates
Our proven model does not conclusively predict an earnings beat for KB Home this time around. This 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.
Earnings ESP: KB Home has an Earnings ESP of 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.
Dream Finders Homes, Inc. (DFH - Free Report) has an Earnings ESP of +7.46% and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
DFH is expected to register a 14.1% decline in earnings for the to-be-reported quarter. Notably, DFH reported better-than-expected earnings in three of the last four quarters and missed on another occasion, with the average surprise being 131.6%.
D.R. Horton (DHI - Free Report) has an Earnings ESP of +2.11% and a Zacks Rank #3.
DHI’s earnings for the to-be-reported quarter are expected to grow 4.7%. The company reported better-than-expected earnings in all the last four quarters, with the average surprise being 28.9%.
NVR, Inc. (NVR - Free Report) has an Earnings ESP of +0.79% and a Zacks Rank #3.
NVR’s earnings for the to-be-reported quarter are expected to decline 11.1%. The company reported better-than-expected earnings in all the last four quarters, with the average surprise being 14.6%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.