) reached a 52-week high of $24.32 on Friday, May 03, 2013
gaining momentum from solid first quarter results announced on
Mar 21. Moreover, the homebuilder has a bright outlook for the
rest of the year. The closing price of the shares on May 03 was
$24.02, yielding a superb year to date return of 47.8%.
Share Price Drivers
Estimates have been rising higher for KB Home after it
reported strong first-quarter 2013 results on the back of
double-digit increases in home sales, prices, gross margin
expansion and solid overhead leverage.
KB Home's first quarter 2013 adjusted loss was narrower than
the Zacks Consensus Estimate loss per share and the year-ago loss
per share. The year-over-year improvement was driven by higher
homebuilding revenues, improved housing gross margin and reduced
selling, general and administrative (SG&A) expense ratio.
Total revenue was higher than the year-ago quarter and the Zacks
Consensus Estimate. Total revenue increase was driven by higher
number of homes closed and hike in average selling prices.
The company 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 the average selling prices significantly. The
company also witnessed strong gross margin expansion and solid
overhead leverage during the quarter.
Based on the assumption that the housing recovery will
continue to gain momentum, the company intends to improve its
supply side in order to benefit from the increase in housing
demand in the upcoming quarters. As such, the company expects to
open more than 120 communities in 2013. It expects its community
count to increase 15% for the year and sequentially in each
quarter in 2013. The company expects its land investment to
exceed $1 billion for fiscal 2013. Owing to improving
operating leverage, gross margin is expected to improve
sequentially from the second quarter and thereafter improve in
the subsequent quarters in fiscal 2013.
The robust quarterly results and a promising outlook for the
upcoming quarters led to an upward movement in estimates. In
fact, the Zacks Consensus Estimate for 2013 and 2014 increased a
respective 12.5% and 13.2% to 27 cents and $1.20 over the last 30
KB Home carries a Zacks Rank #2 (Buy).
Other stocks in the homebuilding sector that are performing
well and therefore deserve a mention include
D. R. Horton Inc.
Ryland Group Inc.
MDC Holdings Inc.
). While D. R. Horton and Ryland Group carry a Zacks Rank #1
(Strong Buy), MDC holds Zacks Rank #2 (Buy).
D R HORTON INC (DHI): Free Stock Analysis
KB HOME (KBH): Free Stock Analysis Report
MDC HLDGS (MDC): Free Stock Analysis Report
RYLAND GRP INC (RYL): Free Stock Analysis
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