KB Home Earnings: This Streak is Broken

KB Home (NYSE:KBH) climbed to a profit in the third quarter and beat Wall Street’s expectations in the process. KB Home constructs and sells homes through its operating divisions across the United States under the name KB Home. It operates a homebuilding and financial services business serving homebuyers in markets nationwide.

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KB Home Earnings Cheat Sheet

Results: Reported a profit of $3.3 million (4 cents per diluted share) in the quarter. KB Home had a net loss of $9.6 million or a loss 13 cents per share in the year-earlier quarter.

Revenue: Rose 15.6% to $424.5 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: KB Home beat the mean analyst estimate of a loss of 15 cents per share. It beat the average revenue estimate of $301.3 million.

Quoting Management: “We are pleased to report a profit for the third quarter,” said Jeffrey Mezger, president and chief executive officer. “During the quarter, we continued to generate improvement in several key financial and operating metrics. The favorable year-over-year performance in our deliveries; revenues; operating income; net orders; and backlog were particularly encouraging as we operated with fewer communities. These trends illustrate that the strategic repositioning of our operations to restore profitability is starting to yield tangible results, as we also saw significant increases in our overall average selling price and gross profit margin, and substantial improvement in our selling, general and administrative expense ratio. At the same time, it is clear that the recovery in housing is gaining momentum across the country as inventory levels are declining and home prices are on the rise. In particular, we are seeing dramatic improvement in California, where we are the state’s largest homebuilder, as the continued strengthening in the coastal markets is now spreading inland to Sacramento, the Central Valley and the Inland Empire.”

Key Stats:

Revenue has risen for the last four quarters. Revenue increased 11.4% to $302.9 million in the second quarter. The figure rose 29.3% in the first quarter from the year earlier and climbed 6.4% in the fourth quarter of the last fiscal year from the year-ago quarter.

The company has now beaten estimates the last two quarters. In the second quarter, it topped expectations with a loss of -31 cents versus a mean estimate of a loss of 36 cents per share.

Looking Forward: Analysts appear increasingly optimistic about the company’s results for the next quarter. The average estimate for the fourth quarter has moved up from 2 cents a share to 6 cents over the last thirty days. The average estimate for the fiscal year is a loss of $1 per share, a rise from $1.05 thirty days ago.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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