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.

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