One of the leading homebuilding companies in the U.S.,
) recently acquired 45 finished lots and 160 undeveloped lands in
Copperfield community in Converse. Prices of KB homes in Converse
are expected to start from $150,000s.
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Owing to its operational business model KBnxt, KB Home always
begins construction only after a purchase agreement is executed.
As such, the consumers buying KB homes in Converse will get the
liberty to plan their homes according to their preference. They
can choose from the option of one and two story floor plans,
ranging from 1,582 to 3,728 square feet.
This process also helps the company turn over its inventory more
quickly than its peers, thereby supplying capital for
reinvestment. In the long run, this reduces the risk of unsold
inventory, leading to higher returns on invested capital.
Converse is one of the fastest growing communities in Northeast
Bexar County. The acquisition of the lots and land in Copperfield
community in Converse is in line with KB Home's strategic shift
in its geographic footprint. The focus is to place the
communities in highly desirable land-constrained submarkets that
enable it to sell larger, higher-priced homes, thus driving a
strong increase in average selling price.
The rising demand for new homes has led to a favorable situation
in the housing market, where inventory levels are dropping and
prices are moving up. Therefore, building adequate number of new
homes is necessary in order to maintain the required level of
inventory to meet the growing demand for homes. Acquiring lots
and lands in the Copperfield community will help the company to
capitalize on the increasing housing demand.
With housing market recovery gaining momentum, KB Home believes
its strategic initiatives including overhead reduction, margin
expansion, and land investments in higher-priced, better-located
communities; and increasing backlog will help it achieve
profitability in the upcoming quarters. Though we have faith in
KB Home's strategic initiatives, we believe that it may take time
to achieve sustainable profitability as the housing market
recovery process is erratic and uneven.
We currently have a Neutral recommendation on KB Home, a peer of
DR HORTON INC.
). The stock carries a Zacks #3 Rank (a short-term Hold rating).