In response to weak first quarter 2012 results announced in late
March this year,
KB Home
(
KBH
) reduced its dividend for the second quarter. The company declared
a dividend of $0.025 per share, down from the company's quarterly
dividend of $0.625 per share. The dividend will be paid on May 17
to shareholders whose names appear in the record books on May 3,
2012.
KB Home recently reported lower-than-expected first quarter
results. The company reported adjusted net loss per share of 51
cents in the first quarter of fiscal 2012, wider than the adjusted
loss of 47 per share in the year-ago quarter. Lower revenues and
gross margins led to the wider loss in the quarter. The loss was
far more than the Zacks Consensus Estimate of a loss of 23 cents
per share.
Total revenue increased 29% year over year to $254.6 million
propelled by housing revenues. Total revenue was however much below
the Zacks Consensus Estimate of $324.0 million as well as the
prior-quarter revenue of $479.9 million due to declining net
orders. Housing revenue increased 29% over the prior-year quarter
to $251.9 million due to a 21% increase in the number of homes
delivered to 1,150 and a 6% rise in average selling price to
$219,000. Housing revenues, homes delivered and average selling
prices however declined significantly from the preceding quarter.
Net orders declined 8% in the first quarter of 2012 due to a sharp
increase in cancellations. The company's backlog totaled 2,203
homes as of February 29, 2012, up 30% from 1,689 homes as of
February 28, 2011.
The housing market has been fragile since the last few years.
The downturn in the housing industry - aggravated by an overall
weak economic condition, high unemployment rates, reduced credit
availability, rising interest rates and lack of incentives like
tax-credit for homebuyers - has been weighing down on homebuilders
like KB Home and its compatriots
DR Horton, Inc.
(
DHI
),
Pulte Group
(
PHM
) and
Lennar Corporation
(
LEN
). Other than that, the housing market became extremely aggressive
and KB Home's new homes faced tough competition from housing
alternatives, including resale homes, foreclosed homes, short sale
homes and rental housing. Increased availability of housing
alternatives has kept the company's earnings under pressure.
Management believes that the housing market is slowly
stabilizing with increase in employment rates and higher consumer
confidence. Management believes that the housing recovery combined
with the company's strategic initiatives (like overhead reduction,
margin expansion, and land investments towards higher priced,
better located communities) and the Nationstar deal will help it to
achieve profitability in 2012.
D R HORTON INC (
DHI
): Free Stock Analysis Report
KB HOME (
KBH
): Free Stock Analysis Report
LENNAR CORP -A (
LEN
): Free Stock Analysis Report
PULTE GROUP ONC (
PHM
): Free Stock Analysis Report
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