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KB Home (KBH) Stock Gains on Earnings & Revenue Beat in Q3
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KB Home (KBH - Free Report) reported impressive third-quarter fiscal 2017 results on Sep 28 on solid housing fundamentals.
Shares of the company gained nearly 9% in the first full trading session following the results.
Quarterly earnings of 51 cents per share outpaced the Zacks Consensus Estimate of 47 cents by 8.5% and increased a significant 21.4% from the year-ago 42 cents.
Total revenue of $1.144 billion beat the Zacks Consensus Estimate of $1.12 million by 2.1%. The top line also improved 25.3% year over year, driven by higher housing revenues.
Segment Details
Homebuilding Revenue: In the reported quarter, homebuilding revenues grew 25.3% year over year to $1.14 billion, driven by double-digit increase in the number of homes delivered. While land generated $3.38 million in revenues, housing revenues of $1.14 billion improved 25% from the year-ago quarter.
Net orders rose 4% to 2,608 homes. Value of net orders increased 15.3% to $1.07 billion on double-digit growth in the company’s West Coast and Southwest regions.
Number of homes delivered jumped 11.2% to 2,765 homes, buoyed by double-digit increase in the company's West Coast, Southwest and Central regions. The company’s Southeast region saw a 10% decline in deliveries. Average selling price went up 12.4% to $411,400.
At the end of the reported quarter, average community count was 234, in line with the year-ago level.
The company’s backlog totaled 5,455 homes (as of Aug 31, 2017), up 4.4% year over year. Potential housing revenues from backlog increased 14.5% to $2.11 billion, with West Coast and Southwest regions registering double-digit gains.
Margins
Adjusted housing gross profit margin (a metric that excludes the amortization of previously capitalized interest and inventory-related charges) expanded 50 basis points (bps) year over year to 21.7%.
As a percentage of housing revenues, selling, general and administrative expenses (SG&A) were 9.6%, up 120 bps year over year. This marks a record low third-quarter ratio in the company's history.
Adjusted homebuilding operating margin (after excluding inventory-related charges) increased 140 bps year over year to 7.4%.
Financial Services: In the quarter, Financial Services’ revenues grew 1.3% year over year to $3.2 million.
Financial Position
KB Home had homebuilding cash and cash equivalents of $494.1 million as of Aug 31, 2017, lower than $592.1 million as of Nov 30, 2016.
Net debt was $2 billion as of Aug 31, 2017, compared with $2.05 billion as of Nov 30, 2016. This reflects a net debt-to-capitalization ratio of 52.2% in the quarter, slightly lower than 54.3% at the end of 2016.
Fourth-Quarter Guidance
KB Home expects housing revenues between $1.3 billion and $1.4 billion, ASP of around $425,000-$430,000, reflecting a year-over-year increase of about 10%. Meanwhile, SG&A ratio will likely be in the range of 9.2% to 9.4%.
The company expects fourth-quarter housing gross profit margin in the range of 18% to 18.3%, up 35 bps from the midpoint of the previous guided range.
It anticipates fourth-quarter average community count to be flat year over year.
Effective tax rate for the fourth quarter is expected at around 39%.
Fiscal 2017 Guidance
KB Home expects homebuilding revenue to come at $4.3 billion, the midpoint of the previously guided range of $4.2-$4.4 billion, reflecting 20% growth from the 2016 level.
At year end, the company expects its net to debt capital ratio to be around 50%, the higher-end of its stated goal of 40% to 50% in the near to mid-term.
Lennar Corporation (LEN - Free Report) is expected to release third-quarter 2017 results on Oct 3, 2017. The Zacks Consensus Estimate for earnings is currently pegged at $1.01.
PulteGroup, Inc. (PHM - Free Report) is scheduled to release third-quarter 2017 results on Oct 24, 2017. The Zacks Consensus Estimate for earnings is currently pegged at 60 cents, highlighting 38.8% growth year over year.
D.R. Horton, Inc. (DHI - Free Report) is slated to release fourth-quarter fiscal 2017 results on Nov 11, 2017. The Zacks Consensus Estimate for earnings is currently pegged at 85 cents, reflecting growth of 10.4% year over year.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
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KB Home (KBH) Stock Gains on Earnings & Revenue Beat in Q3
KB Home (KBH - Free Report) reported impressive third-quarter fiscal 2017 results on Sep 28 on solid housing fundamentals.
Shares of the company gained nearly 9% in the first full trading session following the results.
Quarterly earnings of 51 cents per share outpaced the Zacks Consensus Estimate of 47 cents by 8.5% and increased a significant 21.4% from the year-ago 42 cents.
Total revenue of $1.144 billion beat the Zacks Consensus Estimate of $1.12 million by 2.1%. The top line also improved 25.3% year over year, driven by higher housing revenues.
Segment Details
Homebuilding Revenue: In the reported quarter, homebuilding revenues grew 25.3% year over year to $1.14 billion, driven by double-digit increase in the number of homes delivered. While land generated $3.38 million in revenues, housing revenues of $1.14 billion improved 25% from the year-ago quarter.
Net orders rose 4% to 2,608 homes. Value of net orders increased 15.3% to $1.07 billion on double-digit growth in the company’s West Coast and Southwest regions.
Number of homes delivered jumped 11.2% to 2,765 homes, buoyed by double-digit increase in the company's West Coast, Southwest and Central regions. The company’s Southeast region saw a 10% decline in deliveries. Average selling price went up 12.4% to $411,400.
At the end of the reported quarter, average community count was 234, in line with the year-ago level.
The company’s backlog totaled 5,455 homes (as of Aug 31, 2017), up 4.4% year over year. Potential housing revenues from backlog increased 14.5% to $2.11 billion, with West Coast and Southwest regions registering double-digit gains.
Margins
Adjusted housing gross profit margin (a metric that excludes the amortization of previously capitalized interest and inventory-related charges) expanded 50 basis points (bps) year over year to 21.7%.
As a percentage of housing revenues, selling, general and administrative expenses (SG&A) were 9.6%, up 120 bps year over year. This marks a record low third-quarter ratio in the company's history.
Adjusted homebuilding operating margin (after excluding inventory-related charges) increased 140 bps year over year to 7.4%.
Financial Services: In the quarter, Financial Services’ revenues grew 1.3% year over year to $3.2 million.
Financial Position
KB Home had homebuilding cash and cash equivalents of $494.1 million as of Aug 31, 2017, lower than $592.1 million as of Nov 30, 2016.
Net debt was $2 billion as of Aug 31, 2017, compared with $2.05 billion as of Nov 30, 2016. This reflects a net debt-to-capitalization ratio of 52.2% in the quarter, slightly lower than 54.3% at the end of 2016.
Fourth-Quarter Guidance
KB Home expects housing revenues between $1.3 billion and $1.4 billion, ASP of around $425,000-$430,000, reflecting a year-over-year increase of about 10%. Meanwhile, SG&A ratio will likely be in the range of 9.2% to 9.4%.
The company expects fourth-quarter housing gross profit margin in the range of 18% to 18.3%, up 35 bps from the midpoint of the previous guided range.
It anticipates fourth-quarter average community count to be flat year over year.
Effective tax rate for the fourth quarter is expected at around 39%.
Fiscal 2017 Guidance
KB Home expects homebuilding revenue to come at $4.3 billion, the midpoint of the previously guided range of $4.2-$4.4 billion, reflecting 20% growth from the 2016 level.
At year end, the company expects its net to debt capital ratio to be around 50%, the higher-end of its stated goal of 40% to 50% in the near to mid-term.
KB Home Price, Consensus and EPS Surprise
KB Home Price, Consensus and EPS Surprise | KB Home Quote
KB Home currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Upcoming Peer Releases
Lennar Corporation (LEN - Free Report) is expected to release third-quarter 2017 results on Oct 3, 2017. The Zacks Consensus Estimate for earnings is currently pegged at $1.01.
PulteGroup, Inc. (PHM - Free Report) is scheduled to release third-quarter 2017 results on Oct 24, 2017. The Zacks Consensus Estimate for earnings is currently pegged at 60 cents, highlighting 38.8% growth year over year.
D.R. Horton, Inc. (DHI - Free Report) is slated to release fourth-quarter fiscal 2017 results on Nov 11, 2017. The Zacks Consensus Estimate for earnings is currently pegged at 85 cents, reflecting growth of 10.4% year over year.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>