KB Home Earnings Preview

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Investors never know what to expect for KB Home (NYS: KBH) , as it has wavered between topping and missing analysts estimates during the past fiscal year. The company will unveil its latest earnings on Wednesday, March 14. KB Home constructs and sells homes through its operating divisions across the United States under the name KB Home. It operates a homebuilding and financial services business serving homebuyers in markets nationwide.

What analysts say:

  • Buy, sell, or hold?: Analysts think investors should stand pat on KB Home with 10 of 16 analysts rating it hold. Analysts don't like KB Home as much as competitor Standard Pacific overall. Four out of seven analysts rate Standard Pacific a buy compared to three of 16 for KB Home. While analysts still rate the stock a hold, they are a little more optimistic about it compared to three months ago.
  • Revenue Forecasts: On average, analysts predict $337.3 million in revenue this quarter. That would represent a rise of 71.3% from the year-ago quarter.
  • Wall Street Earnings Expectations: The average analyst estimate is a loss of $0.22 per share. Estimates range from a loss of $0.30 to a loss of $0.06.

What our community says:
The majority of CAPS All-Stars are wary about the future of KBH, with 64% awarding it an "underperform" rating. Fools are of two minds on the stock, as 45.9% of the community is granting it an "outperform" rating and 54.1% an "underperform" rating. Over the past month, Fools have logged just five posts on KB Home. The tone of their comments has generally been bearish. KB Home's bearish CAPS rating of one out of five stars falls short of the Fool community sentiment.

Management:
The company's gross margin shrank by 4.3 percentage points in the last quarter. Revenue rose 6.4% while cost of sales rose 12.1% to $406.9 million from a year earlier.

Now, a look at how efficient management has been at running the business. Traditionally, margins serve as an illustration of how efficiently a company captures portions of sales dollars. KB Home has seen slipping net margins year-over-year for the last four quarters. Net margins reflect what percentage of each dollar earned by the company becomes profit. Here are KB Home's reported margins for the last four quarters:

Quarter

Q4

Q3

Q2

Q1

Gross Margin

15.2%

17.3%

7.6%

13.3%

Operating Margin

0.8%

0.9%

(20.8%)

(23.9%)

Net Margin

2.9%

(2.6%)

(25.2%)

(58.2%

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