Shares of KB Home (KBH) plunged 4.3% in the extended trading session on Wednesday after the company reported mixed results for its second quarter, which ended May 31.
Earnings came in at $1.50 per share in Q2, beating consensus estimates of $1.31 per share. This also compares favorably with the $0.55 per share recorded in the same quarter last year.
Revenues of $1.44 billion missed analysts’ estimates of $1.5 billion but jumped 58% from the year-ago period.
Notably, the number of homes delivered during the quarter grew 40% from the year-ago level to 3,504 units. Also, the company noted that average monthly net orders per community rose to 7 from 2.4. This was driven by strong housing demand during the quarter. (See KB Home stock chart on TipRanks)
Chairman, President, and CEO of KB Hom, Jeffrey Mezger, said, “With a backlog value above $4 billion, we are poised to deliver a substantial increase in revenue this year, at solid margins that we anticipate will contribute to a return on equity of roughly 20%. As we look to 2022, our backlog, together with our expected community count growth, positions our company for another year of healthy expansion.”
On June 15, Wedbush analyst Jay McCanless reiterated a Buy rating on the stock with a price target of $56. This implies 29.1% upside potential from current levels.
McCanless noted that the fall in KB Home’s share price makes it a buying opportunity, as he finds no reasonable basis for the fall.
The rest of the Street is cautiously optimistic about the stock, with a Moderate Buy consensus rating based on 5 Buys and 4 Holds. The average KB Home analyst price target of $54 implies 24.8% upside potential from current levels.
KBH scores an 8 out of 10 on TipRanks’ Smart Score rating system, suggesting that the stock is likely to outperform market averages.
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