The stock of KB Home (KBH) is down 5% after the company reported financial results that missed Wall Street targets across the board.
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The homebuilder announced earnings per share (EPS) of $0.52, missing analysts’ consensus estimate of $0.54. Revenue in the period came in at $1.08 billion, which was slightly below Wall Street forecasts of $1.09 billion. Sales were down 23% year-over-year.
KB Home’s housing gross profit margin compressed to 15.5%, excluding inventory-related charges, compared to 20.3% in the same quarter a year earlier. The margin compression was mostly due to price reductions, higher relative land costs, and reduced operating leverage, said the company.
KB Home’s income statement. Source: The Fly
KB Home’s Outlook
Management at KB Home said the company delivered 2,370 homes at an average selling price of $452,100 in the most recent quarter. That was down from $500,700 in the year-earlier period. KB Home repurchased $50 million of common stock during the quarter.
For current quarter, KB Home said that it expects housing revenues of $1.05 billion to $1.15 billion, with a midpoint of $1.10 billion. The company anticipates deliveries in the range of 2,250 to 2,450 homes and a housing gross profit margin between 15% and 15.6%. For the full fiscal year, management projects deliveries of 10,000 to 11,500 homes and housing revenues of $4.80 billion to $5.50 billion.
Is KBH Stock a Buy?
KB Home stock has a consensus Hold rating among nine analysts. That rating is based on three Buy, five Hold, and one Sell recommendations issued in the last three months. The average KBH price target of $62.56 implies 18% upside from current levels. These ratings could change after the company’s financial results.
