Shares of KB Home (NYSE: KBH) were down on Friday. The stock has gained 43% year-to-date and 68% over the past 12 months. The homebuilder delivered better-than-expected results for the third quarter of 2023 and raised its outlook for the full year even as it faces a challenging environment. Here’s a look at how it fared in its most recent quarter:
KB Home saw revenues drop by 14% to $1.59 billion in Q3 2023 compared to the previous year. Net income was down 41% to $149.9 million and EPS was down 37% to $1.80 versus last year. Despite the year-over-year declines, both the top and bottom line numbers managed to surpass market expectations.
In the third quarter, KBH’s housing revenues dropped to $1.57 billion from $1.84 billion in the year-ago period, reflecting a 7% decrease in the number of homes delivered and an 8% decline in their overall average selling price. The company, however, did see improvements in construction cycle time and lower cancellation rates.
Net orders grew 52% and net order value rose 54% in the quarter, reflecting improved demand versus the prior-year period when factors like high mortgage interest rates and inflation led people to put their home purchases on hold.
The company has an optimistic outlook on the housing market due to low existing home inventory and a shortage of new homes. On its quarterly conference call, it said it expected first-time buyers to fuel the housing market over the next decade, which is favorable for its business.
KB Home expects its housing revenues for the fourth quarter of 2023 to range between $1.55-1.65 billion. The overall average selling price is expected to increase to approx. $486,000 due to an expected mix shift towards higher-priced West Coast deliveries. For the full year of 2023, the company expects housing revenues of approx. $6.31 billion and average selling price of approx. $481,000.
Looking into 2024, KBH estimates its housing revenues will range between $6.5-7.0 billion. The company anticipates over 150 new community openings over the next five quarters and estimates its year-end community count for 2024 will be up about 15% year-over-year.
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