KB Home (NYSE:KBH) Beats Street Forecast On Strong Demand And Increasing Orders

Detroit-based KB Home (NYSE:KBH) closed the week on a high after posting earnings that beat Wall Street estimates as the company continues to benefit from increasing orders and improving economy. Higher order numbers and selling prices allowed the giant home builder to post a 29% increase in revenue for the quarter ended February.

Technical analyst have identified strong buy signals in KBH.

 Lower margins from increased land and construction costs could still not prevent the giant home builder from toppling the Street estimates. KB Home (NYSE:KBH) ended the quarter on a high on selling more homes at relatively higher prices

Net income for the quarter came in at $7.8 million or 8 cents a share compared to $10.6 million generated a year earlier. Higher land and construction costs have been cited as the reason for the decline in net income.

New orders for the quarter ended February grew by 24% while deliveries increased by 10% to 1593 homes. Home sales in Southern California have however remained sluggish attributed to higher costs of housing. Market watchers are however predicting that a combination of more homes in the market, as well as the improving economy, could spur a rebound sometimes in the spring

Chief executive officer Jeffrey Mezger, also confirmed that KB Home (NYSE:KBH) ended the quarter with 32 new home communities across its geographic footprint which translates to 25% more active communities than a year ago. Growth in key geographic areas also helped offset pressure on gross margin that was down to 15.1% from 17.7%.

KB Home (NYSE:KBH)’s revenue for the quarter was up by 29% to $580 million aided by growth in housing as well as land sale revenue. Housing revenue was up by 19% to $525 million with land sale revenue coming in at $53 million from a year-ago levels of $8.1 million. KB Home’s backlog as of February 28, stood at 3,505 homes, a 22% increase from last year’s level.

About the Author

Erica is a graduate of New York University's school of Journalism. She joined US Markets Daily as a general assignment reporter in January of 2008.

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