Zinger Key Points
- KB Home reported Q4 EPS of $2.52, beating Street’s $2.44 per share, with deliveries growing 17% Y/Y.
- The company’s margin guidance for Q1 came in better than feared.
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KB Home KBH reported strong fourth-quarter results, sending its stock surging in early trading on Tuesday.
The company reported earnings of $2.52 per share, beating consensus of $2.44 per share. Here are some key analyst takeaways.
- Keefe, Bruyette & Woods analyst Jade Rahmani maintained a Market Perform rating and price target of $85.
- RBC Capital Markets analyst Mike Dahl reiterated a Sector Perform rating and price target of $67.
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Keefe, Bruyette & Woods: KB Home deliveries grew by a higher-than-expected 17% year-on-year, Rahmani said in a note. "Management noted higher rates and rate volatility impacting homebuyer demand and is offering incentives as a strategy to maintain sales pace," he added.
Although KB Home's orders are expected to be flat year-on-year in the first quarter of 2025, "management noted negative double-digit growth thus far but anticipates higher-single-digit growth for the remainder of the period," the analyst stated. The company guided to housing revenue of $1.45 billion to $1.55 billion for the first quarter and $7 billion to $7.5 billion for the full year, implying midpoint earnings of $1.58 per share and $8.41 per share, respectively.
RBC Capital Markets: KB home reported orders of 2,688, up 41% year-on-year, beating the Street's expectations of 32% growth, Dahl said. Management guided to a decline in orders by 250 in 2025, which represents a 3% decline, with the pace of declining moderating in the second and third quarters, he added.
Management's margin guidance for the fiscal first quarter "wasn't as bad as feared," the analyst stated. "Net, we view the guide as having risk to both revs and margins given the embedded assumptions of flat incentives/direct cost reductions and lower cycle times/elevated spec mix needed to hit deliveries," he further wrote.
Price Action: Shares of KB Home had risen by 4.17% to $66.75 at the time of publication on Tuesday.
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