Three Reasons KB Homes' Foundation Is Shaky
Pop in orders doesn't beat the big loss.
Another awesome weekend. I took in my daughter's soccer game, enjoyed a quiet movie night at home with my wife and kids, and got a couple of nice bike rides in. I hope yours was just as enjoyable.
Asian stocks took a hit overnight. The Hang Seng was off 2.07% and the Nikkei ended down 2.5%. European stocks were a mixed bag earlier this morning. And here in the US, we're currently trading higher.
Here's what I'm seeing this fine Monday morning:
KB Home (KBH):
The shares have certainly rebounded since earlier in the year and aren't trading too far from their 52-week high. But I don't have any intention of dipping my toe in the water. Check out the homebuilder's third-quarter numbers.
It lost $0.87, whereas analysts had been looking for a $0.58 loss. The good news was that it beat by a smidge on the top line and saw a pop in orders.
Some additional thoughts:
1. The aforementioned pop was nice to see. It probably gives existing shareholders some sense of hope. But I still find it hard to get too excited.
2. Beyond the loss it reported, its CEO offered up the following in the press release, which wasn't too swift:
"While tentative indications are that some negative economic trends are slowing or leveling out to varying degrees in certain markets, the ongoing impact of and the potential for increased foreclosures and mortgage delinquencies, higher unemployment, tighter credit standards, and relatively weak consumer confidence make the timing and extent of a sustained rebound still uncertain."
3. With the company expected to lose money this year and next, I'd be surprised if the stock really had the legs to continue to run.
For my last take on the company, see Ticker Shock: Four Reasons Not to Build on KB Home.
I'm not sure how many people were really paying attention, but on Friday, it was reported that the food company's board approved a (quarterly) dividend increase from $0.19 to $0.20.
1. Yeah, I realize that doesn't sound like a whole heck of a lot, but it would be a pickup of more than 5% and I don't think it should be taken lightly at all. The company surely could have figured out other things to do with the flash, from marketing to simply banking it. Instead it's choosing to fork it over to shareholders -- a good sign that its board is optimistic about what the future may have in store.
2. Even beyond that I'm bullish on this company. After all, it cooks up some good eats, is coming off a better-than-expected quarter, and is expected to show some solid growth from this year to next.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter