Sales at KB Home (NYSE: KBH) Are Down, But Orders Are Up


Construction company KB Home (NYSE: KBH) recently released its results for the fourth quarter of 2020. The company’s revenue and profits declined on a year-on-year basis but orders reached a new record. At $35.29, the stock is trading 2.75% above and 2.39% above its SMA20 and SMA50, respectively. Despite this, the stock is now 7.64% less than its SMA200 with a daily volume of 2.38 million and a change of 0.80%. Over the past year, KBH has lost -3.92% compared to a 6-month gain of 10.59%. The company has a 50-day simple moving average (SMA 50) of $34.47 and a 200-day simple moving average (SMA 200) of $35.26.

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Revenue at KB Home dropped 23% year-on-year to $1.19 billion in the fourth quarter. After nearly stopping residential construction in the middle of last year, the company is still recovering sales. The company delivered 2876 houses over the past quarter compared with 3929 during the same quarter the previous year.

Though revenues dropped, KB Home was still able to increase its gross margin on housing to 24 %. The adjusted operating margin was 10.7 %. A total net income of $106.1 million was realized by the company, a decrease of 13.9%. Earnings per share diluted decreased by 14.5%, to $1.12.

In addition to this, KB Home (NYSE: KBH) released many positive indicators that indicate rapid growth. Hence, the order book grew by 42%. During the fourth quarter, the company’s orders surpassed its highest level since 2005. As for pending orders, the value now stands at $3 billion, up 63% from the fourth quarter of 2019. It is important to note that KB Home earned $4.2 billion in its first three quarters in 2020.

The increase in the company’s backlog is a consequence of a 5% increase in the average home price over the year, which has reached $414,000. Consequently, KB Home (NYSE: KBH) expects to see significant growth in both scale and profit in 2021. Management does not provide specifics because there is still some uncertainty regarding the economy. According to KB Home, the forecast can only be accurate if the pandemic is completely contained.


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