Monday, January 3, 2011

KB Home (NYSE: KBH): Q4 Earnings Preview 2010

KB Home (NYSE: KBH) is scheduled to release its fiscal fourth-quarter earnings before the opening bell on Friday, January 7, 2011. Analysts, on average, expect the company to post a loss of 17 cents per share on revenue of $441.99 million. In the year ago period, the company reported earnings of $1.31 cents per share on revenue of $674.57 million.

KB Home constructs and sells residential homes in the United States. It constructs and sells homes through its operating divisions across the United States under the name KB Home.

In the preceding third quarter, the Los Angeles, California-based company's net loss was $1.40 million, or 2 cents per share, compared to $66.05 million, or 87 cents per share, in the year-earlier quarter. Revenue grew 9% to $501.0 million from $458.5 million in the same quarter last year. Analysts, on average, expected the company to report a loss of 15 cents per share on revenue of $483.53 million. The company said that the number of homes delivered rose 4% from a year ago to 2,320 and the average selling price increased 6% year over year to $214,200. Backlog at August 31, 2010 totaled 2,169 homes, representing potential future housing revenues of approximately $455.3 million. Company-wide net orders decreased 39% to 1,314 in the third quarter of 2010 from 2,158 in the year-earlier quarter.

The company is expanding its community count to create revenue growth opportunities. The homebuilder's current strategic vision calls for the opening of over 100 communities next year.

The housing market, which appeared poised for a recovery earlier in the year, now could be heading for a second downward drift. A new bout of declining home prices is threatening to hamper the U.S. recovery, just as consumers and the overall economy have been showing signs of healing. Home prices across 20 major metropolitan areas fell 1.3% in October from September, the third straight month-over-month drop, according to the S&P/Case-Shiller home-price index. Many economists expect the declines to continue into at least next spring, erasing most of the gains made since prices bottomed out in early 2009.

Meanwhile, existing-home sales rose 5.6% last month to a seasonally adjusted annual rate of 4.68 million units, the National Association of Realtors said recently. Despite the uptick, the road to a sustainable housing recovery is long. . Last month's pace of sales of previously occupied homes remains 27.9% below year-earlier levels in Nov. 2009, the initial deadline for the first-time buyer tax credit. Homebuilders, themselves, remain discouraged about the job market and large number of foreclosures. The National Association of Home Builders said recently that builders' sentiment remained unchanged in the last month. The piece of data -- known as The National Association of Home Builders/Wells Fargo housing market index -- stands at 16. Any reading below 50 is said to imply negative sentiment about the market.

In terms of stock performance, KB Home shares have lost nearly 2% over the past year.

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