Why KB Home's Shares Soared
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of homebuilder KB Home (NYS: KBH) were wowing investors today, as they rose more than 16% following a better-than-expected quarterly report.
So what: KB's "surprise profit" isn't quite what it sounds like. During the quarter ending in August, the company benefitted to the tune of nearly $30 million from an insurance recovery and a tax benefit. However, the adjusted $0.12-per-share loss was still markedly better than what Wall Street was expecting. The loss was also an improvement on a $0.13 per-share loss last year, and other key metrics were moving in the company's favor -- revenue was up 16%, home deliveries rose 7%, and the average selling price of their homes climbed 8%.
Now what: If you've been following the news lately, you've read plenty about a possible turnaround in the housing market. Sure, we've been hearing about a possible housing-market recovery ever since the housing market collapsed; however, this time around, the numbers seem to actually be confirming the story. If a recovery is indeed underway, this would not only be good news for KB Home and other homebuilders, but for the broader economy, as well.
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The article Why KB Home's Shares Soared originally appeared on Fool.com.Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.Fool contributorMatt Koppenhefferdoes not have a financial interest in any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting hisCAPS portfolio, or you can follow Matt on Twitter@KoppTheFoolorFacebook. The Fool'sdisclosure policyprefers dividends over a sharp stick in the eye.