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KB Home (KBH) Tops Q3 Earnings, Revenues Miss Estimates
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KB Home (KBH - Free Report) reported impressive third-quarter fiscal 2016 adjusted earnings of 42 cents per share that surpassed the Zacks Consensus Estimate of 39 cents by 7.7%.
However, total revenue of $913.3 million in the third quarter missed the Zacks Consensus Estimate of $954.1 million by 4.3%. That said, revenues registered an 8.3% year-over-year increase, driven by higher housing revenues.
Segment Details
Homebuilding Revenue: In the reported quarter, homebuilding revenues grew 8.3% year over year to $910.1 million, driven by double-digit increase in the number of homes delivered. There were no revenues from land sales, compared to $41.6 million recorded a year ago. Hence, housing revenues of $910.1 million improved 12.2% from the year-ago period.
Net orders rose 16% to 2,508 homes, driven by demand growth in the housing markets served by KB Home. Value of net orders climbed 20.2% to $929.6 billion
Number of homes delivered jumped 11.2% to 2,487 homes, driven by double-digit increases in the company's West Coast and Central regions. Average selling price went up 2.4% to $365,900.
At the end of the reported quarter, average community count was 235, down 9% year over year.
The company’s backlog totaled 5,226 homes, up 12.6% year over year. Potential housing revenues from backlog increased 16.6% to $1.85 billion, driven by higher backlog.
Adjusted housing gross profit margin (excluding the amortization of previously capitalized interest and inventory-related charges), improved 10 basis points to 21.2%.
As a percentage of housing revenues, selling, general and administrative expenses (SG&A) improved 110 basis points to 10.8% owing to increased housing revenue.
Adjusted homebuilding operating margin (after excluding inventory-related charges) increased 120 basis points to 6%, driven by an increase in gross margin
Financial Services: In the quarter, Financial Services’ revenues grew 7.4% year over year to $3.2 million.
Financial Position
KB Home had homebuilding cash, cash equivalents and restricted cash of $335.3 million as of Aug 31, 2016, lower than $568.4 million as of Nov 30, 2015.
Homebuilding debt amounted to $2.34 billion as of Aug 31, 2016 compared with $2.06 billion as of Nov 30, 2015, reflecting a net debt-to-capitalization ratio of 58.2%, more than 54.9% as of 2015 end.
KB Home currently carries a Zacks Rank #4 (Sell).
Stocks to Consider
Better-ranked stocks in the construction sector include MDC Holdings Inc. , TRI Pointe Group, Inc. (TPH - Free Report) and PulteGroup, Inc. (PHM - Free Report) . While MDC Holding and TRI Pointe Group sport a Zacks Rank #1 (Strong Buy), PulteGroup has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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KB Home (KBH) Tops Q3 Earnings, Revenues Miss Estimates
KB Home (KBH - Free Report) reported impressive third-quarter fiscal 2016 adjusted earnings of 42 cents per share that surpassed the Zacks Consensus Estimate of 39 cents by 7.7%.
However, total revenue of $913.3 million in the third quarter missed the Zacks Consensus Estimate of $954.1 million by 4.3%. That said, revenues registered an 8.3% year-over-year increase, driven by higher housing revenues.
Segment Details
Homebuilding Revenue: In the reported quarter, homebuilding revenues grew 8.3% year over year to $910.1 million, driven by double-digit increase in the number of homes delivered. There were no revenues from land sales, compared to $41.6 million recorded a year ago. Hence, housing revenues of $910.1 million improved 12.2% from the year-ago period.
Net orders rose 16% to 2,508 homes, driven by demand growth in the housing markets served by KB Home. Value of net orders climbed 20.2% to $929.6 billion
Number of homes delivered jumped 11.2% to 2,487 homes, driven by double-digit increases in the company's West Coast and Central regions. Average selling price went up 2.4% to $365,900.
At the end of the reported quarter, average community count was 235, down 9% year over year.
The company’s backlog totaled 5,226 homes, up 12.6% year over year. Potential housing revenues from backlog increased 16.6% to $1.85 billion, driven by higher backlog.
Price, Consensus and EPS Surprise
Price, Consensus and EPS Surprise | Quote
Margins
Adjusted housing gross profit margin (excluding the amortization of previously capitalized interest and inventory-related charges), improved 10 basis points to 21.2%.
As a percentage of housing revenues, selling, general and administrative expenses (SG&A) improved 110 basis points to 10.8% owing to increased housing revenue.
Adjusted homebuilding operating margin (after excluding inventory-related charges) increased 120 basis points to 6%, driven by an increase in gross margin
Financial Services: In the quarter, Financial Services’ revenues grew 7.4% year over year to $3.2 million.
Financial Position
KB Home had homebuilding cash, cash equivalents and restricted cash of $335.3 million as of Aug 31, 2016, lower than $568.4 million as of Nov 30, 2015.
Homebuilding debt amounted to $2.34 billion as of Aug 31, 2016 compared with $2.06 billion as of Nov 30, 2015, reflecting a net debt-to-capitalization ratio of 58.2%, more than 54.9% as of 2015 end.
KB Home currently carries a Zacks Rank #4 (Sell).
Stocks to Consider
Better-ranked stocks in the construction sector include MDC Holdings Inc. , TRI Pointe Group, Inc. (TPH - Free Report) and PulteGroup, Inc. (PHM - Free Report) . While MDC Holding and TRI Pointe Group sport a Zacks Rank #1 (Strong Buy), PulteGroup has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>