Another Homebuilder Delivers a Profit (KBH)

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KB Home (NYSE: KBH) this morning reported fiscal third-quarter 2013 earnings per share (EPS) of $0.04 on revenue of $424.5 million. In the same period a year ago, the homebuilder reported a net loss of $0.13 per share on revenue of $367.3 million. Third-quarter results compare to the Thomson Reuters consensus estimates for a net loss of $0.16 per share and $430.3 million in revenue.

The company’s president and CEO said:

[I]t is clear that the recovery in housing is gaining momentum across the country as inventory levels are declining and home prices are on the rise. In particular, we are seeing dramatic improvement in California, where we are the state’s largest homebuilder, as the continued strengthening in the coastal markets is now spreading inland to Sacramento, the Central Valley and the Inland Empire.

One of the impacts of our strategic repositioning has been a declining community count, which has moderated our net order growth. Now that we have a clear path to achieve profitability, we are accelerating our investments to expand our business in all four of our operating regions. Although our community count will bottom in the fourth quarter, we expect to reverse this trend in 2013.

Deliveries of new homes rose more than 7% over the same period a year ago and selling prices were up nearly 8%. New orders are up 3.4% and order backlog is up a whopping 33%.

Gross margins also rose, from 16.9% last year to 17.5% this year. Not a lot, but moving in the right direction.

The company’s shares are up 1.5% in premarket trading this morning, at $13.30 in a 52-week range of $5.02 to $13.65. Thomson Reuters had a consensus analyst price target of $10.67 before morning’s report. None of the other homebuilders is seeing a reaction to KB Home’s report, probably because they have gotten the good housing news priced in already.

Paul Ausick

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