KB Home (KBH - Free Report) recently announced the opening of Sienna Grove in Jacksonville to boost single-family home count. The company plans to build 21 one- and two- storey homes in the property along with eight distinct floor plans. The property lies close to Interstates 95 and 295, J. Turner Butler Boulevard and downtown Jacksonville.
These homes will be built per the latest ENERGY STAR guidelines and will include WaterSense label. This is expected to result in savings of $972-$1,668 per annum in utility costs, for homebuyers, per the floor plan.
The company’s Built-to-Order process provides buyers with a wide range of choices along with a personalized customer experience through in-house community teams. This consumer-centric approach helps homebuyers design a home with the features and amenities of their choice. Not only has this approach lent KB Home a competitive advantage over its peers, it has led to a lower cost of production.
KB Home’s homebuilding revenues declined in the first quarter of fiscal 2019 due to lower net order and backlog value in the second half of 2018. That said, KB Home believes stable interest rates, stronger demand from increased consumer confidence, community growth and smaller floor plans for home buyers addressing affordability concerns are likely to drive growth through 2019. Notably, the company’s average community count at the end of the first quarter was 244, up 10% on a year-over-year basis.
The U.S. housing market started showing positive signs since the beginning of 2019, after a torrid second-half 2018. Declining mortgage rates and moderate home prices have been adding strength to KB Home and other homebuilders. Meanwhile, the overall homebuilding industry remains positive owing to ongoing traffic trends that indicate higher inclination of buyers, thereby reflecting a slow but steady housing recovery.
Meanwhile, shares of KBH have gained 22%, outperforming its industry’s rally of 16.3% in the past three months. The company has an impressive earnings surprise history, having surpassed the Zacks Consensus Estimate in 12 of the trailing 13 quarters.
Zacks Rank & Key Picks
Currently, KB Home carries a Zacks Rank #3 (Hold).
A few better-ranked stocks in the Zacks Construction sector are Great Lakes Dredge & Dock Corporation (GLDD - Free Report) , EMCOR Group, Inc. (EME - Free Report) and North American Construction Group Ltd. (NOA - Free Report) .
While Great Lakes Dredge & Dock sports a Zacks Rank #1 (Strong Buy), EMCOR Group and North American Construction carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Great Lakes, EMCOR and North American Construction Group’s 2019 earnings are expected to grow 170.6%, 6.9% and 176.2%, respectively.
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