KB Home Earnings Preview: A Surge in Q1 Revenue Expected
Still, analysts predict a per-share net loss for the homebuilder.
KB Home (KBH) is scheduled to report first-quarter fiscal 2012 results tomorrow, March 23, before the markets open.
The homebuilder reported a profit last quarter, ending a three-quarter string of losses, as well as a year-over-year revenue increase that broke a streak of three consecutive quarters of revenue declines. Investors no doubt will be looking for new profit and sales streaks to have begun, perhaps indicating a turnaround at KB Home and in the housing sector.
Analysts on average predict that KB Home will post a net loss of $0.24 per share. That compares to a loss of $1.49 per share in the year-ago period and to a profit of $0.18 per share in the previous quarter. And 60 days ago, the first-quarter estimate was $0.27 per share. Note that per-share earnings results were better than consensus estimates in four of the past six quarters. Fourth-quarter revenue is expected to have surged 71.5% from the same period of last year to total $337.7 million.
Looking back to the fourth quarter, the homebuilder said its profit fell 20.2% to $13.9 million, or $0.18 per share. Revenue increased 6.4% from a year ago to $479.9 million. Both numbers exceeded analyst expectations.
Management said, "With our fourth-quarter net orders up 38% from a year ago, and our year-end homes in backlog up 61%, we believe we are moving into 2012 well-positioned to achieve further improvement in our financial metrics."
Looking ahead to the second quarter, analysts so far expect to see another per-share net loss, but one that is narrower than in both the first quarter and the year-ago quarter. Revenues are forecast to have grown both sequentially and year over year.
KB Home is one of the largest homebuilders in the United States. It constructs and sells various types of residential homes, including attached and detached single-family residential homes, townhomes, and condominiums, in Arizona, California, Colorado, Florida, Maryland, Nevada, North Carolina, Texas, and Virginia. The company also offers title and insurance services to homebuyers. It is headquartered in Los Angeles, was founded in 1957, and now has a market cap of $872 million.
Competitors include homebuilders DR Horton (DHI), Lennar (LEN), and PulteGroup (PHM). DR Horton recently said it swung to a better-than-expected Q1 profit but revenues missed estimates. Lennar reports its results next week, and analysts are looking for lower EPS and higher revenues. PulteGroup returned to profitability in Q4 and said its sales rose.
During the three months that ended in February, KB Home announced the retirement of CBS (CBS) CEO Les Moonves from the board and an offering of senior notes. The company also began offering net-zero energy homes in Houston, Las Vegas, and Colorado.
KB Home has a long-term earnings-per-share growth forecast of 10.3%, a price-to-book ratio of 2.3, and a dividend yield of 2.2%. But the forward earnings multiple is higher than the industry average P/E ratio, as well as the forward earnings multiples of the competitors mentioned above. And short interest is about 49% of the float. Only four of 25 analysts polled who follow the stock recommend buying it.
The share price is more than 69% higher than at the beginning of the year, despite pulling back almost 9% in the past week. It remains above the 50-day and 200-day moving averages, where it has been since mid-January. Year to date, the stock has outperformed the broader markets and the competitors mentioned above.
Bullish: Investors interested in exchange traded funds invested in KB Home might want to consider the following trades:
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