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In the last reported quarter, its earnings topped the Zacks Consensus Estimate by 6.3% and rose 79% from the year-ago quarter’s levels. The top line missed the consensus mark by 0.8% but increased 26% year over year.
The company's earnings topped analysts’ expectations in 25 of the trailing 27 quarters.
Trend in Estimate Revision
For the quarter to be reported, the Zacks Consensus Estimate for the bottom line has declined to $2.85 per share from $2.88 in the past 60 days. The projection indicates a 49.2% increase from the year-ago quarter’s earnings of $1.91 per share. The consensus estimate for revenues is pegged at $1.99 billion, suggesting a rise of 19.1% from the prior-year quarter’s levels.
Factors at Play
Revenues: KB Home’s housing revenues are expected to have increased in the fiscal fourth quarter from a year ago, given the strong backlog level. Also, a solid return-focused growth model is likely to have aided the company’s top line. The company expects housing revenues in the range of $1.95-$2.05 billion, up from the year-ago figure of $1.67 billion.
The Zacks Consensus Estimate for the company’s Homebuilding revenues — including housing and land — is pegged at $1,989 million, indicating an increase of 19.2% from the year-ago period’s levels. Within Homebuilding, the consensus mark for housing revenues is pegged at $1,987 million, calling for a rise of 19.7% from the prior-year quarter’s tally. The same for land revenues is pegged at $2.52 million, indicating a significant decrease from $9.46 million in the year-ago quarter.
Although home prices have started moderating in the past few months, still it is expected to have contributed to the growth. KBH anticipates average selling price or ASP to be $503,000. The consensus estimate for the ASP is $497,000, indicating growth from $451,000 reported a year ago.
The consensus estimate for homes delivered is pegged at 3,977 units, suggesting a rise from the year-ago quarter’s level of 3,679 units.
Margins: Although higher material and labor costs are likely to have put pressure on the bottom line, higher ASP are likely to have expanded margins in the to-be-reported quarter. Also, initiatives like the Returns-Focused Growth Plan and Built-to-Order approach are likely to have somewhat offset those headwinds.
The company expects the homebuilding operating margin (excluding the impact of any inventory-related charges) to improve to 16.7% for the quarter, suggesting an increase from 12.9% a year ago.
Assuming no inventory-related charges, KB Home expects fiscal fourth-quarter housing gross margin in the range of 25-26% versus 22.4% reported a year ago. The SG&A expense ratio will be 8.8% of housing revenues compared with 9.8% reported in the year-ago period.
Orders & Backlogs: The consensus estimate for the backlog is 8,707 units, implying a notable fall from 10,544 units reported in the prior year. Also, the consensus mark for new orders is currently pegged at 1,929 units, suggesting a year-over-year decline from 3,529 units, given the ongoing affordability issues and higher mortgage rates in the industry.
What Our Model Indicates
Our proven model does not conclusively predict an earnings beat for KB Home this time around. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here. You can see the complete list of today’s Zacks #1 Rank stocks here.
Earnings ESP: The Earnings ESP for KB Home is 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: KB Home currently has a Zacks Rank #5 (Strong Sell).
Stocks With Favorable Combination
Here are some companies in the Zacks Construction sector, which according to our model, have the right combination of elements to post an earnings beat for their respective quarters to be reported.
Dycom Industries, Inc. (DY - Free Report) has an Earnings ESP of +36.36% and holds a Zacks Rank #2.
DY is expected to register 800% growth in earnings for the to-be-reported quarter. Notably, DY reported better-than-expected earnings in all the last four quarters, with the average surprise being 142.9%.
Quanta Services, Inc. (PWR - Free Report) has an Earnings ESP of +0.73% and a Zacks Rank #3.
PWR’s earnings for the to-be-reported quarter are expected to grow 4.6%. The company reported better-than-expected earnings in three of the last four quarters and met on one occasion, with the average surprise being 5.9%.
United Rentals, Inc. (URI - Free Report) has an Earnings ESP of +2.35% and a Zacks Rank #2.
URI’s earnings for the to-be-reported quarter are expected to grow 34.4%. The company reported better-than-expected earnings in all the last four quarters, with the average surprise being 9.5%.
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Here's What to Expect From KB Home's (KBH) Earnings in Q4
KB Home (KBH - Free Report) is slated to report fourth-quarter fiscal 2022 results (ended Nov 30) on Jan 11, after market close.
In the last reported quarter, its earnings topped the Zacks Consensus Estimate by 6.3% and rose 79% from the year-ago quarter’s levels. The top line missed the consensus mark by 0.8% but increased 26% year over year.
The company's earnings topped analysts’ expectations in 25 of the trailing 27 quarters.
Trend in Estimate Revision
For the quarter to be reported, the Zacks Consensus Estimate for the bottom line has declined to $2.85 per share from $2.88 in the past 60 days. The projection indicates a 49.2% increase from the year-ago quarter’s earnings of $1.91 per share. The consensus estimate for revenues is pegged at $1.99 billion, suggesting a rise of 19.1% from the prior-year quarter’s levels.
Factors at Play
Revenues: KB Home’s housing revenues are expected to have increased in the fiscal fourth quarter from a year ago, given the strong backlog level. Also, a solid return-focused growth model is likely to have aided the company’s top line. The company expects housing revenues in the range of $1.95-$2.05 billion, up from the year-ago figure of $1.67 billion.
KB Home Price and EPS Surprise
KB Home price-eps-surprise | KB Home Quote
The Zacks Consensus Estimate for the company’s Homebuilding revenues — including housing and land — is pegged at $1,989 million, indicating an increase of 19.2% from the year-ago period’s levels. Within Homebuilding, the consensus mark for housing revenues is pegged at $1,987 million, calling for a rise of 19.7% from the prior-year quarter’s tally. The same for land revenues is pegged at $2.52 million, indicating a significant decrease from $9.46 million in the year-ago quarter.
Although home prices have started moderating in the past few months, still it is expected to have contributed to the growth. KBH anticipates average selling price or ASP to be $503,000. The consensus estimate for the ASP is $497,000, indicating growth from $451,000 reported a year ago.
The consensus estimate for homes delivered is pegged at 3,977 units, suggesting a rise from the year-ago quarter’s level of 3,679 units.
Margins: Although higher material and labor costs are likely to have put pressure on the bottom line, higher ASP are likely to have expanded margins in the to-be-reported quarter. Also, initiatives like the Returns-Focused Growth Plan and Built-to-Order approach are likely to have somewhat offset those headwinds.
The company expects the homebuilding operating margin (excluding the impact of any inventory-related charges) to improve to 16.7% for the quarter, suggesting an increase from 12.9% a year ago.
Assuming no inventory-related charges, KB Home expects fiscal fourth-quarter housing gross margin in the range of 25-26% versus 22.4% reported a year ago. The SG&A expense ratio will be 8.8% of housing revenues compared with 9.8% reported in the year-ago period.
Orders & Backlogs: The consensus estimate for the backlog is 8,707 units, implying a notable fall from 10,544 units reported in the prior year. Also, the consensus mark for new orders is currently pegged at 1,929 units, suggesting a year-over-year decline from 3,529 units, given the ongoing affordability issues and higher mortgage rates in the industry.
What Our Model Indicates
Our proven model does not conclusively predict an earnings beat for KB Home this time around. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here. You can see the complete list of today’s Zacks #1 Rank stocks here.
Earnings ESP: The Earnings ESP for KB Home is 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: KB Home currently has a Zacks Rank #5 (Strong Sell).
Stocks With Favorable Combination
Here are some companies in the Zacks Construction sector, which according to our model, have the right combination of elements to post an earnings beat for their respective quarters to be reported.
Dycom Industries, Inc. (DY - Free Report) has an Earnings ESP of +36.36% and holds a Zacks Rank #2.
DY is expected to register 800% growth in earnings for the to-be-reported quarter. Notably, DY reported better-than-expected earnings in all the last four quarters, with the average surprise being 142.9%.
Quanta Services, Inc. (PWR - Free Report) has an Earnings ESP of +0.73% and a Zacks Rank #3.
PWR’s earnings for the to-be-reported quarter are expected to grow 4.6%. The company reported better-than-expected earnings in three of the last four quarters and met on one occasion, with the average surprise being 5.9%.
United Rentals, Inc. (URI - Free Report) has an Earnings ESP of +2.35% and a Zacks Rank #2.
URI’s earnings for the to-be-reported quarter are expected to grow 34.4%. The company reported better-than-expected earnings in all the last four quarters, with the average surprise being 9.5%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.