KB Home (KBH) Falls After Missing Fourth Quarter Profit Forecast
Founded in 1957, KB Home is a homebuilding company that constructs and sells homes in the United States.
Shares of Los Angeles, CA, based KB Home (KBH) fell on Tuesday, against the backdrop of a mildly lower day in stocks overall. The company's stock was down 16.29%, falling $2.70 per share to close at 13.87, on volume of 35,014,762 shares. The company reported that its fourth quarter earnings missed expectations, and that demand in some of its markets was getting softer.
On Tuesday, the company reported its results for both the fourth quarter and for its 2014 fiscal year. Fourth quarter earnings, adjusted for pre-tax gains, came in at $.27 per share, well below analysts expectations of $.52 per share. It also came in below the $.31 per share net income for the same period one year earlier.
Net income for the quarter totaled $852.8 million, or $8.36 per diluted share, which reflects an income tax benefit of $824.2 million that resulted from the company's $825.2 million deferred tax asset valuation allowance reversal.
Not all the news was bad however. Revenues for the fourth quarter came in at $796 million, compared to analysts expectations of $778.9 million. It was also 29% higher than $618.5 million in revenues from the same period in fiscal 2013. The company also reported that it delivered 2,229 homes in the fourth quarter, representing an increase of 9% from 2,038 homes delivered in the fourth quarter of 2013. The increase in sales occurred in each of the company's homebuilding regions.
For the fiscal year, total revenues came in at $2.40 billion, which was up 14% from the $2.10 billion for fiscal 2013. Much of the increase in revenues was the result of an increase in the average selling price per home of $328,400, which was up 13% from the $291,700 in fiscal 2013. The company's backlog also increased by 14%, rising to 2,909 homes at the fiscal year end, from 2,557 homes on November 30, 2013.
"Through execution on our core strategic initiatives, we also achieved our community count growth objective, ending the fourth quarter with 227 communities, a 19% increase from last year," said KB Home CEO Jeffrey Mezger. "Our higher community count helped us generate double-digit year-over-year growth in net orders, a 22% increase in net order value, and a 34% rise in our ending backlog value for the quarter. Looking forward, we believe that our higher backlog and expanded community footprint have positioned us for further success in the coming year."
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