Bullish stock to watch: KB Home (NYSE: KBH)

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KB Home (NYSE: KBH) stock rose over 2.9% on March 27th, 2020 (as of 11:29 am GMT-4 ·; Source: Google finance) after the company posted better than expected results for the first quarter of FY 20. KB Home has reported first-quarter net income of $59.7 million compared to net income of $30 million, in the year-ago period. The company has withdrawn its 2020 guidance due to the COVID-19 pandemic. The company’s cash and cash equivalents stood at $429.7 million, compared to $453.8 million. The Company had total liquidity of $1.22 billion, that also included the cash and cash equivalents and $787.6 million of available capacity under its unsecured revolving credit facility. Stockholders’ equity has increased to $2.44 billion from $2.38 billion at the end of the quarter.

Moreover, during the quarter Homes delivered posted growth of 28% to 2,752, with increases in all four of the Company’s regions. The average selling price had risen 5% to $389,500. Homebuilding operating income rose 92% to $60.2 million and its operating income margin improved 170 basis points to 5.6%.

Housing gross profit margin had improved 30 basis points to 17.4%. The housing gross profit margin improved due to improved operating leverage on the back of higher housing revenues, and lower relative amortization of previously capitalized interest, which were partly offset by a mix shift of homes delivered.

Furthermore, the company’s net orders rose 31% to 3,495, which is the highest first-quarter level since 2007, with net order value up 35% to $1.38 billion. Net orders and net order value has risen all four of the Company’s regions. The cancellation rate as a percentage of gross orders increased to 14% from 20%. The Company’s ending backlog grew 26% to 5,821 homes. Ending backlog value rose 28% to $2.12 billion, compared to $1.66 billion, due to increases in all four regions. Both metrics has reached their highest first-quarter levels in 13 years. The average community count for the first quarter increased 3% to 251.

KBH in the first quarter of FY 20 has reported the adjusted earnings per share of 63 cents, beating the analysts’ estimates for the adjusted earnings per share of 45 cents. The company had reported the adjusted revenue growth of 33 percent to $1.08 billion in the first quarter of FY 20, beating the analysts’ estimates for revenue of $957.7 million.


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