Earnings Preview: KBH Home

KB Home (KBH) is expected to report Q3 earnings before market open Friday, September 26, with a conference call scheduled for 11:30 a.m. ET.

Guidance

Analysts are looking for a loss of ($1.25) on revenue of $725.46M. The consensus range is ($3.68) to (33c) for EPS, and revenue of $604.8M to $854.95M, according to First Call. Citing weaker traffic and higher valuations,

Analyst Views

Credit Suisse on September 9 downgraded the U.S. homebuilding sector to Market Weight from Overweight. The brokerage said it has seen further declines in traffic throughout late summer, and markets that had shown signs of life in recent months slipped in August. Based on the deteriorating traffic trends, Credit Suisse cut KB Home to Neutral from Outperform. Analyst Daniel Oppenheim believes that the recent bailout of mortgage giants Fannie Mae (FNM) and Freddie Mac (FRE) will lower mortgages rates, which aids affordability by the same as 3% to 4% fall in home prices, but believes this is not enough to increase sales.

On the other hand, Goldman Sachs analyst Chris Hussey believes the government bailout plan for the Fannie and Freddie may stabilize the market and lower home loan rates. The analyst continues to recommend home-builder stocks, as new homes sales as a percentage of households are near 40-year lows and other "traditional buy signals have been triggered".