KB Home: Stay Away For Now
Money Investor • 18 Comments
Money Investor • 18 Comments
Thu, Nov. 17, 11:43 AM
- This morning's housing starts for October was off the charts - rising 25.5% from September to the fastest pace in nine years. Stripping out the notoriously volatile multifamily starts still leaves single family starts up 10.2% from September.
- Of course, interest rates continue to rise - with the 10-year Treasury yield up another three basis points to 2.26% - but the builders can worry about that another time.
- The S&P 500 is ahead 0.35%, with the homebuilders are outperforming by a mile.
- Toll Brothers (TOL +2.9%), LGI Homes (LGIH +6.2%), Taylor Morrison (TMHC +3.5%), KB Home (KBH +2.4%), Lennar (LEN +2.5%), Hovnanian (HOV +1.4%), Pulte (PHM +2.7%), D.R. Horton (DHI +3.2%), NVR (NVR +1.8%)
Tue, Nov. 1, 9:59 AM
- Discussions about homebuilding M&A have been picking up of late, says analyst Will Randow, and he expects the next deal will likely be one public company acquiring another, rather than a smaller private player.
- "Aside from the normal benefits of M&A, we believe larger public builders may be more inclined to acquire the young (i.e. smaller public) given the slower paced recovery environment that exhibits lower pricing power," says Randow, who picks D.R. Horton (NYSE:DHI) as best-positioned to be a buyer.
- Other possible acquirers include: KB Home (NYSE:KBH), Meritage (NYSE:MTH), PulteGroup (NYSE:PHM), Toll Brothers (NYSE:TOL), and TRI Pointe (NYSE:TPH).
- Potential targets: Century Communities (NYSE:CCS), Green Brick Partners (NASDAQ:GRBK), M.D.C. Homes (NYSE:MDC), Meritage (also on the buyer list), New Home (NYSE:NWHM), Taylor Morrison (NYSE:TMHC), UCP, William Lyon (NYSE:WLH).
- Randow's top accretive scenario ... TRI Pointe buying William Lyon.
Wed, Oct. 19, 7:45 AM
- Mostly in the southeast region, the land includes that in which management believes investment in development in not justified, or located outside of served markets, or entitled for different product types than what the company typically offers.
- KBH estimates it will take an inventory-related charge of $30M-$40M in FQ4.
- The news came at the company's investor meeting yesterday. Other items:
- Q4 financial targets are reaffirmed, and net orders for the first six weeks of Q4 gained 14% Y/Y.
- For 2017, the company is aiming at housing revenue of $3.8B-$4.2B, ASP of $370K-$385K, operating income margin of 5.7-6.3%; average community count flat from 2016.
- Shares fell 5.45% in very thin after hours trading.
Thu, Oct. 6, 4:22 PM
Wed, Oct. 5, 4:16 PM
- The company's long-term issuer default rating is affirmed at B+, with Stable outlook.
- Fitch notes KB Home (NYSE:KBH) was somewhat conservative in committing to land buys early in the housing recovery, and has accelerated spending in the last two years. The company shouldn't become stressed as long as it maintains minimum return parameters for land purchases.
- While credit metrics have improved in the last few years, they remain generally weak, says Fitch. Thus the speculative grade.
Wed, Oct. 5, 8:20 AM
- The company announces the purchase of 13 acres in Cary, where it plans to build 41 homes at its Wynwood Community. Development is expected to start soon, with a grand opening planned for early next year.
- KB Home (NYSE:KBH) currently has seven communities open for new homes throughout the Triangle market.
- This new location is 10 minutes from downtown Raleigh.
Tue, Sep. 20, 5:37 PM
Tue, Sep. 20, 4:28 PM
- FQ3 (ended Aug. 31) deliveries up 11% Y/Y to 2,487 homes, with particular strength in West Coast and Central regions. ASP up 2% to $365.9K.
- Adjusted housing gross profit margin up 10 basis points to 21.2%.
- Homebuilding operating income up 43% to $51.5M; operating margin up 120 basis pints to 6% (excl. inventory-related charges and prior year land sales).
- Ending backlog up 17% to $1.85B
- Net orders up 16% to 2,508; net order value up 20% to $929.6M.
- Earnings call at 5 ET
- Previously: KB Home beats by $0.03, misses on revenue (Sept. 20)
- KBH +6.5% after hours
Tue, Sep. 20, 4:08 PM
Tue, Sep. 20, 12:25 PM
- Lennar (NYSE:LEN) was initially higher following this morning's earnings beat, but has turned lower by 4.3% amid cautious earnings call comments on margins.
- Also at work is today's housing starts report which showed an unexpected sharp decline from July to August, with single-family starts dropping to a 10-month low.
- ITB -1.4%, XHB -0.9%
- Hovnanian (HOV -0.9%), KB Home (KBH -1.4%), Pulte (PHM -3.2%), D.R. Horton (DHI -1.2%), Toll Brothers (TOL -1.4%), Taylor Morrison (TMHC -2.5%), LGI Homes (LGIH -1.3%)
Mon, Sep. 19, 5:35 PM
Mon, Sep. 19, 8:29 AM
- The stock price has gone lower of late, but the news flow is and should remain favorable, says Buckingham Research, upgrading KB Home (NYSE:KBH) to Buy from Neutral.
- KB has slid about 10% since late July, but remains higher by nearly 60% from the February lows.
- The stock's up 2.15% in fairly active premarket action.
Tue, Aug. 23, 10:13 AM
- New home sales flew past expectations in July as they rose 31% on a year-over-year comparison. Sales were higher across all regions of the U.S.
- The median price of a house sold during the month was $294,600. Inventory fell to 4.3 months at the current sales pace.
- June's mark was revised down to 582K from 592K.
- The iShares Dow Jones U.S. Home Construction ETF (NYSEARCA:ITB) is up 1.3% after the development. The S&P Homebuilders ETF (NYSEARCA:XHB) is 1.2% higher.
- Toll Brothers (TOL +2.3%) and KB Home (KBH +2.9%) are notable movers in early trading.
Tue, Jul. 26, 10:16 AM
- June new home sales came in at a seasonally-adjusted annualized rate of 592K, up from May's rate of 572K, and the fastest pace since February 2008.
- Expectations had been for 560K.
- The median price of $306.7K was up 6% Y/Y, and inventory fell to 4.9 months at the current sales pace.
- New home sales in Q2 were up 10% from Q1.
- The ITB popped higher on the news, but has retreated a bit since, now up 0.2% on the session. XHB +0.4%
- Toll Brothers (TOL +0.2%), Hovnanian (HOV +0.8%), Lennar (LEN -0.7%), KB Home (KBH +0.1%), PulteGroup (PHM +0.1%)
Mon, Jul. 18, 10:08 AM
- The team upgrades Toll Brothers (TOL +0.1%) to Buy from Neutral, while cutting KB Home (KBH -1.5%) to Neutral from Buy.
- It could be a valuation call, as the two homebuilders have been headed in opposite directions, with TOL in the red for 2016, and KBH higher by 60%.
- Meanwhile the NAHB reported the tiniest of slides in its builder confidence index, which slipped to 59 from 60.
Thu, Jul. 14, 4:19 PM