We will see earnings from one of the major home builders in the morning, as KB Home (NYSE: KBH) gets its chance to impress Wall Street when it reports its first quarter numbers prior to the market open.The company, which last year ranked the 5th largest home builder in the country, is expected to show a loss for the quarter of $0.81 per share. Should the company be able to match these estimates, it would be a great improvement over its fourth quarter loss of $3.96 per share. When looking back at the same period last year, KBH showed a loss of $3.47 per share for its first quarter last year.
The company is still trying to operate in tough economic times. New home demand is still well below where it was last year, and falling home prices have added extra downward pressure on the company's bottom line. In reaction to falling home prices brought on by the foreclosure disaster, the company has been focusing more on smaller, less expensive homes in order to compete.
KB Homes stock is currently trading at right about $14 per share, but one analyst thinks that the stock is a steal at this price. Megan McGrath, from Barclays, set a $20 price target on the stock, and stated that she expects inventory related charges for the quarter to be around $50 million, which is well below the $206 million charge that it was forced to take in the fourth quarter.
In the morning we will see just how effective the company's shift to smaller floor plans has been, as well as get a little better insight into its February sales numbers.
With so many foreclosures on the market, and another 3 million homeowners expected to be hit with foreclosure notices this year, there is still a long way to go before home builders such as KB Home are going to be out of the woods.
What are your predictions for the company? Should we expect to see earnings beat out Wall Street estimates, or surprise to the downside yet again?
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Reader Comments (Page 1 of 1)
3-27-2009 @ 4:57AM
steve opti said...
I accept that 'KB Home' may have an impact from the 'weak housing market'. May report 'under expectation' results!