We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
KB Home's (KBH) Stock Outpaces Industry YTD: Here's Why
Read MoreHide Full Article
KB Home (KBH - Free Report) remains strong on robust backlog level, a strong lineup of community openings and solid return-focused growth model. Also, the KB Edge (primarily KB2020) business strategy, consumer-centric approach, and land acquisition and development plan are encouraging.
The company’s YTD price performance is reflective of the above-mentioned positives. Year to date, the stock has gained 30.8% compared with the Zacks Building Products - Home Builders industry’s 17.9%, Zacks Construction sector’s 20.8% and S&P 500 composite’s 13% rally.
The company has outperformed other industry players like Meritage Homes Corporation (MTH - Free Report) , Lennar Corporation (LEN - Free Report) and NVR, Inc. (NVR - Free Report) in the said period.
After delivering robust results for first-quarter fiscal 2021, wherein quarterly earnings surpassed the Zacks Consensus Estimate by 17.2% and grew 61.9% from the year-ago period, KB Home is positioned well for fiscal 2021.
The company expects to generate $5.7-$6.1 billion in housing revenues and operating margin of 11-11.8% for fiscal 2021, which is largely attributable to the above-mentioned factors. Notably, the company reported total revenues of $4.18 billion for fiscal 2020.
Business Initiatives to Drive Growth
KB Home has been benefiting from the Returns-Focused Growth Plan — which focuses on enhancing core business strategy, improving asset efficiency and monetizing significant deferred tax assets. The strategy is set to drive homebuilding revenues, operating income margin, return on invested capital, return on equity and leverage ratio.
Also, its focus on KB Edge — which emphasizes on expanding scale to achieve a top-five position in each of the served markets — is commendable. KB Edge is a systematic, fact-based and process-driven approach to homebuilding that is grounded in gaining a detailed understanding of consumers’ location and product preferences as well as product price-to-value perceptions.
Built-to-Order Model a Boon
KB Home’s Built-to-Order process gives it a competitive advantage over peers, leading to lower cost of production. The approach provides buyers with a wide range of choices in major aspects of their future home and personalized customer experience through in-house community teams. Notably, the process provides higher revenues from premiums (lots, plans, and elevations) as well as design studio and structural options.
Owing to the model, net order growth for first-quarter fiscal 2020 led to a 35% year-over-year increase in net order value, which, in turn, fueled the expansion of backlog value to $3.69 billion, reflecting a 58.7% year-over-year rise on roughly 9,238 units. Thanks to the higher backlog, the company is confident about generating increased revenues for fiscal 2021.
Land Acquisition Strategy Strong
KB Home persistently remains focused on land acquisition and development activities, mainly in high-end locations, which is critical for community count as well as top-line growth. Also, the company has a strong land-acquisition pipeline and it expects at least a 10% increase in community count in fiscal 2022 to support market share gains and housing revenue growth.
In first-quarter fiscal 2021, the company invested $566 million in land acquisitions and development (higher than $405 million in first-quarter fiscal 2020). This helped it generate $241 million of net operating cash flow in first-quarter fiscal 2021.
Bitcoin, Like the Internet Itself, Could Change Everything
Blockchain and cryptocurrency have sparked one of the most exciting discussion topics of a generation. Some call it the “Internet of Money” and predict it could change the way money works forever. If true, it could do to banks what Netflix did to Blockbuster and Amazon did to Sears. Experts agree we’re still in the early stages of this technology, and as it grows, it will create several investing opportunities.
Zacks has just revealed 3 companies that can help investors capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly.
Image: Bigstock
KB Home's (KBH) Stock Outpaces Industry YTD: Here's Why
KB Home (KBH - Free Report) remains strong on robust backlog level, a strong lineup of community openings and solid return-focused growth model. Also, the KB Edge (primarily KB2020) business strategy, consumer-centric approach, and land acquisition and development plan are encouraging.
.jpg)
The company’s YTD price performance is reflective of the above-mentioned positives. Year to date, the stock has gained 30.8% compared with the Zacks Building Products - Home Builders industry’s 17.9%, Zacks Construction sector’s 20.8% and S&P 500 composite’s 13% rally.
The company has outperformed other industry players like Meritage Homes Corporation (MTH - Free Report) , Lennar Corporation (LEN - Free Report) and NVR, Inc. (NVR - Free Report) in the said period.
Let’s check out how this well-known homebuilder, which carries a Zacks Rank #2 (Buy), will overcome top-line barriers in the coming quarters. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Robust 2021 Projection
After delivering robust results for first-quarter fiscal 2021, wherein quarterly earnings surpassed the Zacks Consensus Estimate by 17.2% and grew 61.9% from the year-ago period, KB Home is positioned well for fiscal 2021.
The company expects to generate $5.7-$6.1 billion in housing revenues and operating margin of 11-11.8% for fiscal 2021, which is largely attributable to the above-mentioned factors. Notably, the company reported total revenues of $4.18 billion for fiscal 2020.
Business Initiatives to Drive Growth
KB Home has been benefiting from the Returns-Focused Growth Plan — which focuses on enhancing core business strategy, improving asset efficiency and monetizing significant deferred tax assets. The strategy is set to drive homebuilding revenues, operating income margin, return on invested capital, return on equity and leverage ratio.
Also, its focus on KB Edge — which emphasizes on expanding scale to achieve a top-five position in each of the served markets — is commendable. KB Edge is a systematic, fact-based and process-driven approach to homebuilding that is grounded in gaining a detailed understanding of consumers’ location and product preferences as well as product price-to-value perceptions.
Built-to-Order Model a Boon
KB Home’s Built-to-Order process gives it a competitive advantage over peers, leading to lower cost of production. The approach provides buyers with a wide range of choices in major aspects of their future home and personalized customer experience through in-house community teams. Notably, the process provides higher revenues from premiums (lots, plans, and elevations) as well as design studio and structural options.
Owing to the model, net order growth for first-quarter fiscal 2020 led to a 35% year-over-year increase in net order value, which, in turn, fueled the expansion of backlog value to $3.69 billion, reflecting a 58.7% year-over-year rise on roughly 9,238 units. Thanks to the higher backlog, the company is confident about generating increased revenues for fiscal 2021.
Land Acquisition Strategy Strong
KB Home persistently remains focused on land acquisition and development activities, mainly in high-end locations, which is critical for community count as well as top-line growth. Also, the company has a strong land-acquisition pipeline and it expects at least a 10% increase in community count in fiscal 2022 to support market share gains and housing revenue growth.
In first-quarter fiscal 2021, the company invested $566 million in land acquisitions and development (higher than $405 million in first-quarter fiscal 2020). This helped it generate $241 million of net operating cash flow in first-quarter fiscal 2021.
Bitcoin, Like the Internet Itself, Could Change Everything
Blockchain and cryptocurrency have sparked one of the most exciting discussion topics of a generation. Some call it the “Internet of Money” and predict it could change the way money works forever. If true, it could do to banks what Netflix did to Blockbuster and Amazon did to Sears. Experts agree we’re still in the early stages of this technology, and as it grows, it will create several investing opportunities.
Zacks has just revealed 3 companies that can help investors capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly.
See 3 crypto-related stocks now >>