KB Homes Boosts Community Count by Expanding Fuquay-Varina

KB HomeKBH recently announced the opening of Mason Pointe, a single-family home community in Fuquay-Varina, to boost community count. The company plans to build 67 one or two storey homes in the property with nine-floor plans. The property lies in close proximity to U.S. Route 401, North Carolina Highway 55 and Interstate 540.

Notably, the communities will be built per the latest ENERGY STAR guidelines, including the WaterSense label. Given that these new homes are more energy and water efficient, homebuyers are expected to save $744-$1,188 per annum in utility costs.

The move is in line with the company's continuous brand expansion. In fact, last December, the company opened a single-family home community in Uhland, TX.

Community Growth to Drive Top line

KB Home is a highly consumer-centric company that focuses on the Built-to-Order approach, providing buyers with a wide range of choices. The latest move underscores KB Home's aim to boost single-family home count that would drive net orders and in turn revenues.

Although total backlog at the end of 2018 declined 6.9% year over year to 4,108 homes, the company's average community count at the end of the fourth quarter increased 2%.

Moreover, in 2018, the company's total revenues increased 4.1% on a year-over-year basis. The company's net orders also ticked up 1% in the year.

Additionally, the company believes that in 2019, it will record housing revenues of $800 million to $860 million, with average community count growth of 6-10%.

Our Take

We believe that the company's commitment toward expansion and differentiated customer offerings lends it a competitive edge over peers.

However, rising construction and labor costs, higher interest rates, pricing pressure and the recently-imposed tariffs on imported steel and aluminium are likely to bump up costs for the company.

Shares of KB Home have declined 22%, underperforming the industry 's decline of 19% over the past year.

Zacks Rank & Stocks to Consider

KB Home carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the Construction Sector include Great Lakes Dredge & Dock Corporation GLDD , North American Construction Group Ltd. NOA and EMCOR Group, Inc. EME . While Great Lakes sports a Zacks Rank #1 (Strong Buy), NACG and EMCOR carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

Great Lakes' 2019 earnings are expected to increase 27.8% for the current year.

NACG estimates earnings growth of 17.2% for 2020.

EMCOR has a projected earnings growth rate of 6.9% for the current year.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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