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KB Homes reported better than expected Q1 earnings after the market swinging to profit from a loss last year. A decline in homebuilding revenue hurt the top line. $KBH is benefitting from the new income tax regime.

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KB Home NYSE: KBH Reported Earnings After Close Tuesday

 $0.31 Beat $0.26 EPS But $811.5 Million Missed $831.8 Million forecast in revenue. 


KB Homes net income for the quarter was $30 million or $0.31 per share compared to a loss of $71.3 million or $0.82 per share in the previous year quarter. However, revenue fell 7% to $811.5 billion due to lower homebuilding revenue.

Wall Street estimated earnings per share of 26 cents on $831.8 million, according to Refinitiv. KB Home’s results came after weak housing data released earlier Tuesday with the House prices ring a seasonally adjusted 0.1% in January the S&P CoreLogic Case-Shiller 20-city index showed. Price gains were 3.6% higher compared to a year ago. However that is the slowest annual growth since 2012 with a monthly decline for the third-straight month.

US February housing starts were also released at1162K vs 1210K expected from the prior 1230K (revised to 1273K). The fall was large at -8.7% vs -1.6% expected. US February building permits were also weaker at 1296K vs 1305K exp from the prior 1345K (revised to 1317K). The fall was -1.6% vs -0.9% expected.


Market Reaction After hours $24.65 +0.57 (+2.37%)

Highlights and Outlook

  • The company delivered a total of 2,152 homes during the quarter, down 3.2% compared to last year.
  • The average selling price declined 5% to $370,900 due primarily to a shift in geographic mix of homes delivered and a lower average selling price in the company’s West Coast region.
  • Net orders for the first quarter fell 4% to 2,675, and net order value dropped 13% to $1.02 billion.
  • The number of homes in ending backlog decreased 6.9% to 4,631 and ending backlog value plunged 16% to $1.66 billion.
  • The decrease in backlog value reflects fewer homes in backlog and the lower average selling price of those homes due to a shift in geographic mix.
  • The company had total liquidity of $978.5 billion as of February 28, 2019, including cash and cash equivalents of $511.7 million. Inventories increased by 3% to $3.68 billion.
  • Stockholders’ equity increased by 2% to $2.13 billion from November 30, 2018.

KB Home Q1 2019 Earnings

Source: KB Homes, Alpha Street

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