KB Home (NYSE:KBH) posts mixed results for the third quarter

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KB Home (NYSE:KBH) stock rose 2.37% (As on Sep 23, 12:22:01 AM UTC-4, Source: Google Finance) after the company posted mixed results for the third quarter of FY 21, hit by supply chain issues. The Disruptions to the supply chain intensified as the third quarter progressed and along with municipal delays resulted in our build times extending by about two weeks sequentially. This pushed many deliveries into the fourth quarter and will similarly delayed some fourth quarter deliveries into the 2022 first quarter. However, the company’s backlog now stands at roughly 10,700 homes, representing future revenues of over $4.8 billion. The backlog value is up nearly 90% year-over-year with significantly higher margins within this backlog. Considering the quarter-end backlog, the status of the homes under construction and expected construction cycle times, the company anticipates the fourth quarter housing revenues will be in the range of $1.65 billion to $1.75 billion. In the third quarter, the overall average selling price of homes delivered rose to approximately $427,000 from approximately $385,000, reflecting the strength of the housing market. For the fourth quarter, the company is projecting an overall average selling price of approximately $450,000, which would represent a year-over-year increase of 9%.
KBH in the third quarter of FY 21 has reported the adjusted earnings per share of $1.64, beating the analysts’ estimates for the adjusted earnings per share of $1.60, according to the Zacks Consensus Estimate. The company had reported the adjusted revenue growth of 47 percent to $1.47 billion in the third quarter of FY 21, missing the analysts’ estimates for revenue by 5.98%. The housing revenues grew to $1.46 billion for the quarter from $979 million for the prior year period. This improvement reflected a 35% increase in the number of homes delivered and an 11% rise in the overall average selling price.
Meanwhile, in the third quarter, the company had invested about $780 million in land acquisition and development. The company had expanded the lot position to almost 81,000 lots owned or controlled, with the inventory continuing to rotate into a higher quality portfolio of communities. In addition to these investments, the company has returned a significant amount of cash to stockholders through both the regular quarterly cash dividend and the repurchase of $188 million of the stock. These repurchases will further enhance the return on equity in 2022 beyond this year’s expected 20% level, especially when combined with the projected increase in scale to over $7 billion in revenue and higher operating and gross margins.

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