Homebuilder KB Home (KBH) is scheduled to announce its fourth-quarter results before the market opens Tuesday. On average, 14 analysts polled by Thomson Reuters expect a loss of $0.42 per share for the quarter on sales of $577.83 million. Analysts' forecast typically excludes one-time items. In the year-ago fourth quarter, KB Home's loss per share was $3.96 on sales of $919.04 million.
The Los Angeles, California-based company builds various types of homes, including attached and detached single-family homes, townhomes, and condominiums. It also offers mortgage services in a joint venture Countrywide KB Home Loans.
Market conditions in the homebuilding sector, which was the worst-affected by the sub-prime collapse and the credit crunch, are still challenging, characterized by higher foreclosures, growing inventory levels and enduring high unemployment levels.
According to RealtyTrac, an online marketplace for foreclosure properties, foreclosure filings for the month of November increased 18% from the previous year, while it declined 8% from the last month. Nevada, Florida and California posted top state foreclosure rates in November. In October, foreclosure filings were up about 19% from last year, but down 3% sequentially.
RealtyTrac's Chief Executive Officer James Saccacio said a full recovery would come only when unemployment recedes to normal, healthy levels and when availability of credit reaches a more rational balance between the extremes of the past few years.
Meanwhile, homebuilders have seen a rise in sales orders in recent quarters, even though in a slow pace, helped by declining home prices, historically low interest rates and government stimulus programs. The federal tax credit of up to $8,000 for first-time home buyers and the California state tax credit of $10,000 have created unique purchasing opportunities and made it more compelling for home buyers to enter the market.
The federal tax credit was scheduled to end on December 1, 2009. The government has extended it to run through July 1, 2010, and expanded the scheme to include people with higher incomes and who want to trade up into new homes.
In the preceding third quarter, KB Home's net orders increased 62%, with each of the company's geographic regions experiencing year-over-year net order growth. The company reported a narrower loss for the third quarter, helped by lower expenses and cancellation rate as well as an increase in net orders. Net loss for the quarter was $66.05 million or $0.87 per share, compared with $144.75 million or $1.87 per share a year ago.
The third-quarter revenues declined to $458.45 million from $681.61 million in the previous year quarter, as housing revenues dropped due to a 20% decrease in homes delivered and a 15% decline in average selling price. Home Building revenues were $456.35 million, down from $679.12 million last year. Meanwhile, KB Home said at the time of the third-quarter results announcement that the market ''remains in a transition where it will likely be some time before we see meaningful improvement in the economic conditions that are essential to our industry's future growth.''
KB Home's Chief Financial Officer Raymond Silcock has left the company on December 14, after the company and Silcock "mutually" agreed to conclude his employment. The company didn't disclose any reason for the exit of Silcock, who joined the homebuilder just three months ago.
KB Home has stated that William Hollinger, the company's Senior Vice President and Chief Accounting Officer since 2007, will serve as principal financial officer, pending selection of a new Chief Financial Officer.
Amongst KB Home's rivals, DR Horton Inc. (DHI) has recently reported a narrower net loss for the fourth quarter, helped by fewer charges. The company's net loss was $231.9 million or $0.73 per share, versus a net loss of $799.9 million or $2.53 per share in the year-ago quarter. Quarterly homebuilding revenues dropped 42% year-over-year to $1.01 billion, reflecting lower home sales amid challenging market conditions. However, the company's net sales orders were up 26% from last year.
Another peer, Lennar Corp. (LEN,LEN.B) last week said it turned to a profit in the fourth quarter compared to a heavy loss last year, as it recorded an income tax benefit in the period. The Miami, Florida-based company's net earnings for the quarter were $35.57 million or $0.19 per share, compared to a net loss of $810.99 million or $5.12 per share in the previous year.
Lennar's total revenues declined 29% in the fourth quarter to $913.74 million, due to lower home deliveries and average selling prices. However, new orders were up 3% in the quarter. Lennar also believes that it would return to profitability in fiscal 2010.
Last month, brokerage Credit Suisse upgraded KB Home shares to Outperform from Neutral and increased its price target to $18 from $17. Analyst Oppenheim attributed the upgrade to tax refund, more attractive valuation, and a possible improvement in orders in Spring. The analyst expects order growth to begin accelerating during the second quarter of 2010.
KBH closed Monday's trading at $16.38, up $0.41, on a volume of 7.87 million shares. For the 52-week period, the company's trading range was $7.85 - $20.70.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.