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KB Home (KBH) Boosts Community Count With Park Meadows II

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In order to boost single-family community count, KB Home (KBH - Free Report) recently opened Park Meadows II in Phoenix, AZ. Its latest community is located near Interstates 10 and 17, enabling easy commute throughout the Phoenix metropolitan area.

At the property, the company plans to build 34 single-story homes, ranging in size between 1,500 and 1,950 square feet, in three different floor plans. This personalized new home community, having plenty of amenities, will be built per the latest ENERGY STAR guidelines and WaterSense label. According to the floor plan, these guidelines are expected to result in savings between $936 and $1,164 per annum in utility costs, for homebuyers.

The move is in line with its ongoing brand expansion strategy.

Community Expansion to Drive Top Line

On Jun 21, 2019, KB Home announced the opening of new communities namely Eagle Hammock in Kissimmee, FL; Cottages at Harbor Pointe in Harbor City, CA; and Saguaro Station and Dakota Vista in Tucson, AZ.

On Jun 26, 2019, the company reported better-than-expected second-quarter fiscal 2019 results, backed by continued progress of the Returns-Focused Growth plan and stellar average community count growth. As of May 31, 2019, its average community count was up 17% year over year to 252. Notably, the company remains upbeat about further improvement in the rest of 2019.

Strategic Initiatives to Boost Profitability

KB Home continuously focuses on the Built-to-Order approach that provides buyers with a wide range of choices and personalized customer experience through in-house community teams. In fact, the company has its own design studio named KB Home Design Studio, which is a retail-like showroom wherein homebuyers have access to a variety of choices.

Backed by this consumer-centric approach, KB Home not only gained a competitive advantage over its peers but also lowered the cost of production. In the fiscal second quarter, the company’s net orders grew 15.1% from the prior-year period, increasing across all regions served.

Coming to price performance, KB Home’s shares have outperformed its industry so far this year. The stock has gained 39.8% compared with the industry’s 29.4% rally in the said period. The company’s price performance was mainly backed by an impressive earnings surprise history, having surpassed the Zacks Consensus Estimate in each of the trailing 14 quarters, and a solid VGM Score of A.

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) , M.D.C. Holdings, Inc. (MDC - Free Report) and Loma Negra Compania Industrial Argentina Sociedad Anonima (LOMA - 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, M.D.C. Holdings and Loma surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 17.6%, 7.9%, and 12.1%, respectively.

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