|
Related Topics
|
Category: Stock Market and KB Home
Date: 26 September 2019 Stock Price: $32.38 We take a look at the 3rd quarter earnings release of their 2019 fiscal year of home builder, KB Home, who delivered 3022 homes during the 3rd quarter of their 2019 fiscal year.
|
About KB Home
KB Home (NYSE: KBH) is one of the largest and most recognized homebuilders in the United States and has been building quality homes for over 60 years. Today, KB Home operates in 38 markets across eight states, serving a wide array of buyer groups. What sets us apart is giving our customers the ability to personalize their homes from homesites and floor plans to cabinets and countertops, at a price that fits their needs. And as the first builder ever to make every home we build ENERGY STAR® certified, KB Home is able to not only design thoughtful living spaces but ones that lower the cost of homeownership. We also work with our customers every step of the way, building strong personal relationships so they have a real partner in the homebuying process and the experience is as simple and easy as possible.
The image below shows where KB Home is operating within the United States as well as the KB Home buyer profile for Q3 2019 which shows that 55% of the buyers of their homes were first time buyers.
The image below shows where KB Home is operating within the United States as well as the KB Home buyer profile for Q3 2019 which shows that 55% of the buyers of their homes were first time buyers.
Overview of KB Home's latest earnings report
The numbers we are interested in (for the quarter):
Homes delivered for the 3rd quarter of fiscal 2019:
- Total revenue: $1.160 billion (up from $1.225 billion from the same quarter of the previous year)
- Revenue decreased by -5.3% over the last 12 months
- Cost and expenses: $1.071 billion (up from $1.116 billion for the same quarter of the previous year)
- Cost and expenses decreased by -4.03% over the last 12 months
- Net income: $68.136 million (down from $87.476 million for the same quarter of the previous year)
- Diluted income per share: $0.73 (down from $0.87 for the same quarter of the previous year)
- Diluted weighted-average shares outstanding: 92.842 million (down from 101.072 million for the same quarter of the previous year)
- Cash and cash equivalents:$183.794 million
- Cash and cash equivalents per share: $1.97
- Cash and cash equivalents makes up 6.11% of KB Home's market capital
- Cash and cash equivalents makes up 3.7% of KB Home's total assets
- Accounts receivable: $291.492 million
- Accounts receivable makes up 5.7% of KB Home's total assets
- Inventories: $3.919 billion
- Inventories makes up 77.8% of KB Home's total assets
- Stockholders equity of KB Home: $2.262 billion
- Stockholders equity per share: $24.36
- KB Home is trading at 1.33 times its stockholders equity which is well outside the expected range of between 2 and 4 which most companies tend to trade at.
Homes delivered for the 3rd quarter of fiscal 2019:
- West Coast: 838
- South Coast: 566
- Central: 1098
- South East: 520
- Total: 3022
KB Home's management commentary on the results and earnings guidance
LOS ANGELES--(BUSINESS WIRE)-- KB Home (NYSE: KBH) today reported results for its third quarter ended August 31, 2019.
“We are extremely pleased with the strength of our third quarter results, led by a 24% rise in net orders, with double-digit increases in each of our four regions. Our net order growth was driven by both significant community count expansion and a higher absorption rate, a key operational metric where we have long been an industry leader,” said Jeffrey Mezger, chairman, president and chief executive officer. “Notably, during the quarter, we achieved a community absorption pace of 4.3 net orders per month, surpassing last year’s robust performance, while at the same time increasing prices in about 90% of our communities.”
“With year-over-year growth in both revenues and gross profit margin anticipated for our fourth quarter, we are on track for a strong finish to 2019, the third year of our Returns-Focused Growth Plan. As a result of the successful execution of this Plan, we have meaningfully increased our scale and profitability, and generated substantial operating cash flow that we have used to reinvest in our business and reduce our debt, two core components of our Plan. We expect to continue to grow our community count in 2020, and, together with our solid pace and $2.3 billion backlog, we believe we are well positioned for an excellent start to the new year.”
“We are extremely pleased with the strength of our third quarter results, led by a 24% rise in net orders, with double-digit increases in each of our four regions. Our net order growth was driven by both significant community count expansion and a higher absorption rate, a key operational metric where we have long been an industry leader,” said Jeffrey Mezger, chairman, president and chief executive officer. “Notably, during the quarter, we achieved a community absorption pace of 4.3 net orders per month, surpassing last year’s robust performance, while at the same time increasing prices in about 90% of our communities.”
“With year-over-year growth in both revenues and gross profit margin anticipated for our fourth quarter, we are on track for a strong finish to 2019, the third year of our Returns-Focused Growth Plan. As a result of the successful execution of this Plan, we have meaningfully increased our scale and profitability, and generated substantial operating cash flow that we have used to reinvest in our business and reduce our debt, two core components of our Plan. We expect to continue to grow our community count in 2020, and, together with our solid pace and $2.3 billion backlog, we believe we are well positioned for an excellent start to the new year.”
KB Home (NYSE: KBH) stock price history
The image below shows the stock price history of KB Home (NYSE: KBH) over the last 5 years. And it's been a good time for KB Home stockholders. 5 years ago KB Home was trading around $15 a stock, and its currently it's trading at $32.38 Thats a decent return of 115.8% provided over the last 5 years. The stock is also trading at a lot closer to its 52 week high of $32.48 than it is to its 52 week low of $16.82 which to us is a clear indication that the short term sentiment and momentum of KB Home's stock is very positive.
Recent coverage of KB Home
The extract below shows recent coverage of KB Homes as obtained from Zacks
KB Home (KBH - Free Report) came out with quarterly earnings of $0.73 per share, beating the Zacks Consensus Estimate of $0.65 per share. This compares to earnings of $0.87 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of 12.31%. A quarter ago, it was expected that this home builder would post earnings of $0.39 per share when it actually produced earnings of $0.51, delivering a surprise of 30.77%.
Over the last four quarters, the company has surpassed consensus EPS estimates four times. KB Home, which belongs to the Zacks Building Products - Home Builders industry, posted revenues of $1.16 billion for the quarter ended August 2019, missing the Zacks Consensus Estimate by 0.79%. This compares to year-ago revenues of $1.23 billion. The company has topped consensus revenue estimates just once over the last four quarters.
The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. KB Home shares have added about 64.6% since the beginning of the year versus the S&P 500's gain of 18.3%.
Read the original article here
KB Home (KBH - Free Report) came out with quarterly earnings of $0.73 per share, beating the Zacks Consensus Estimate of $0.65 per share. This compares to earnings of $0.87 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of 12.31%. A quarter ago, it was expected that this home builder would post earnings of $0.39 per share when it actually produced earnings of $0.51, delivering a surprise of 30.77%.
Over the last four quarters, the company has surpassed consensus EPS estimates four times. KB Home, which belongs to the Zacks Building Products - Home Builders industry, posted revenues of $1.16 billion for the quarter ended August 2019, missing the Zacks Consensus Estimate by 0.79%. This compares to year-ago revenues of $1.23 billion. The company has topped consensus revenue estimates just once over the last four quarters.
The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. KB Home shares have added about 64.6% since the beginning of the year versus the S&P 500's gain of 18.3%.
Read the original article here
KB Home's (NYSE: KBH) latest stock valuation
So based on the earnings report of KB Home (NYSE:KBH) what do we value KB Homes (KBH) stock at? Based on their latest earnings report our target (full value) price for KB Homes at $32.90 a stock. We therefore believe the stock of KB Home is fully valued
We usually suggest long term fundamental and value investors look to enter the stock at least 10% below our target price, which in this case is $32.90 Therefore we believe the a good entry point into the stock is below $29.60. We believe the stock of KB Homes will hover around its current price levels as it is close to being fully valued based on the earnings reported for Q3, 2019
We usually suggest long term fundamental and value investors look to enter the stock at least 10% below our target price, which in this case is $32.90 Therefore we believe the a good entry point into the stock is below $29.60. We believe the stock of KB Homes will hover around its current price levels as it is close to being fully valued based on the earnings reported for Q3, 2019