Shares of homebuilder
) reached a 52-week high of $24.82 on Tuesday, May 14, 2013,
gaining momentum from solid first-quarter fiscal 2013 results
announced on Mar 21. Moreover, this Zacks Rank #2 (Buy) stock has
a bright outlook for the rest of the year with improving housing
fundamentals. The closing price of the shares on May 14 was
$24.82, yielding a superb year-to-date return of 52.7%.
Share Price Drivers
Estimates have been rising for KB Home since it reported
strong first-quarter fiscal 2013 results, beating the Zacks
Consensus Estimate for both revenues and earnings.
KB Home's first quarter adjusted loss of 16 cents per share
was 30.4% narrower than the Zacks Consensus Estimate. The
reported loss was also narrower than the year-ago loss of 51
cents per share. The significantly improved bottom-line results
were driven by higher homebuilding revenues, improved housing
gross margin and reduced selling, general and administrative
(SG&A) expense ratio.
Total revenue increased 59% year over year in the first
quarter of 2013, driven by higher number of homes closed and hike
in average selling prices. The top-line quarterly results
benefited from management's strategy to focus on highly
sought-after land constrained housing markets. The company
offered larger homes to first-time and move-up buyers, which
helped in raising average selling prices significantly.
In addition to this, management has a bright outlook for the
rest of the year 2013 and expects improved profitability on the
back of increased community count, rising average selling prices,
higher revenue per community, higher backlog and improving
housing momentum. The company is also benefiting from its
strategy of aggressive land investments and shift toward larger
and higher priced homes. These strategies ensure that the company
is able to capitalize on growing momentum of market recovery as
demand and prices of homes escalate.
The robust quarterly results and a promising outlook for the
upcoming quarters led to an upward bias in estimate revisions. In
fact, the Zacks Consensus Estimate for 2013 and 2014 increased a
respective 210% and 10.4% to 31 cents and $1.17 per share over
the last 60 days. Moreover, KB Home has beaten the Zacks
Consensus Estimate in three out of the past four quarters, with
an average surprise of 8.88%.
Other Stocks to Consider
Other stocks in the homebuilding sector that are performing
well and deserve a mention include
Ryland Group Inc.
DR Horton Inc.
Meritage Homes Corporation
), all carrying a Zacks Rank #1 (Strong Buy).
D R HORTON INC (DHI): Free Stock Analysis
KB HOME (KBH): Free Stock Analysis Report
MERITAGE HOMES (MTH): Free Stock Analysis
RYLAND GRP INC (RYL): Free Stock Analysis
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