User 283977

Is KB Homes' Outlook Realistic?

KB Homes' seem to think building less expensive houses is the way out of their predicament. However, if I was in the market for a new home, I would l compare their new, cheaper to build homes with the large number of two to three year old homes that were built to higher quality standards and are currently being sold at fire sale prices. Many of these barely used older homes are likely to be less expensive, include many upgrades, and be built to higher standards in better locations.

I don't see any positives for this stock, or other home builders stocks until the existing inventory of available homes is substantially reduced. Add on to that their statement that they currently have a four year inventory of unsold homes aging in a process known as lot rot, and things don't look very good. The stock is approaching its price back in the early 90s. The next thing I expect to happen is for them to cut their dividend.

I agree with the analysts scepticism on KB Homes' outlook. The only question I see is should current stock holders bale out now or chance riding it into the ground?