KBH is up 14%. They beat all expectations with a 4 cent profit and increased their cash position by $100 million over the quarter. They went positive on tax credits, but hey, income is income! They took on more debt, but they are using it to buy land in hot areas. The point I am trying to make is the market is rewarding the homebuilders that are actively building in the right markets.
PHM is doing the same thing. However, they are generating more profits, more cash and building more homes in the hot areas. KBH's earnings is getting good reviews by the market and when PHM's earnings come out, it will be a much bigger reaction.
All true. And at this point, PHM and KBH are the top two performing builders of the last 3 months. Pulte is going to put up even better numbers than KB because it's got more lots and more diversity and it's got Del Webb, which is a cash cow. But I still think KB is more undervalued and deserves the same kind of price appreciation that PHM has had, which would put KB at $20 pronto. I just wish I knew what they plan to do about their debt (KB)? We've chased off the shorts today. Now, how do we keep them away?
We have some housing data coming out next week, I think it is pending home sales and Case-Shiller. Those number should come in good and will keep the shorts from piling on.
I don't know about KBH's debt as their balance sheet just released shows a build in long term debt. But it is clear after today that the market is not concerned about it and they are using the money to make money. If you go to the Bloomberg site, you can get the current financial statement and balance sheet to review.
At this point I have to agree with you that KBH is headed to $20 and PHM will hit $22 after earnings.