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KB Home (KBH) Boosts Community Count With Sapphire Dunes

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KB Home (KBH - Free Report) recently opened a new single-family home community named Sapphire Dunes in Lancaster, providing a boost to its community count. The community is located near Highway 14 and lies in close proximity to Antelope Valley, the San Fernando Valley and Greater Los Angeles as well as major employment areas.

Built per the latest ENERGY STAR guidelines, these communities will comprise the WaterSense labelled faucets and fixtures. According to the floor plan, this is expected to result in savings of $1,728 and $2,100 per annum in utility costs, for homebuyers. KB Home will allow homebuyers to personalize their new home depending on their budget and style.

Built-to-Order Approach to Boost Profitability

KB Home’s focus on the Built-to-Order approach is commendable. The process provides buyers with a wide range of choices and a personalized customer experience through in-house community teams. In this regard, it is imperative to mention that the company has its own design studio named KB Home Design Studio — a retail-like showroom where homebuyers have access to a variety of choices.

Backed by this consumer-centric approach, KB Home has gained a competitive advantage over its peers and lowered the cost of production.

In the last reported quarter, KB Home’s homebuilding revenues have declined on lower demand due to mortgage rates volatility and affordability concerns. However, the metric is expected to gain from this consumer-centric approach and improving industry perspective moving ahead.

The company believes that stable interest rates, stronger demand from increased consumer confidence and solid job market, community growth and smaller floor plans for homebuyers (addressing affordability concerns), will likely drive growth through 2019. Notably, its average community count at the end of the first quarter was 244, up 10% on a year-over-year basis.

Meanwhile, a glimpse of the company’s share price shows that the stock has outperformed the industry so far this year. Shares of KB Home have gained 40.9% compared with its industry’s 28.8% rally. Additionally, the company has an impressive earnings surprise history, having surpassed the Zacks Consensus Estimate in each of the trailing 13 quarters.

Zacks Rank & Key Picks

Currently, KB Home carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same space are NVR, Inc. (NVR - Free Report) , PulteGroup, Inc. (PHM - Free Report) and Taylor Morrison Home Corporation (TMHC - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

NVR, PulteGroup and Taylor Morrison surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average beat being 17.6%, 13.5%, and 38.7%, respectively.

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