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KB Home (KBH) Expands Presence Across Central Florida

Zacks Equity Research

KB Home KBH announced the addition of three new residential communities — Casa Bella, Rivercrest at Narcoossee and Wilson Estates in Central Florida.

These affordably-priced communities will have one-story single-family homes and two-story single-family homes, with up to six bedrooms. The communities start with the price tag of mid $200,000.

Moreover, these communities will be built per the latest ENERGY STAR guidelines, which will help homebuyers save a reasonable amount in utility costs. With the addition of these new communities, the company now has 18 new-home communities in Central Florida.

The move is in line with KB Home’s ongoing brand-expansion strategy.

Community Expansion to Drive The Top Line

KB Home is aggressively investing in land acquisition to boost community count and drive revenues. The company anticipates healthy community count growth in each quarter of 2019. After investing $188 million and $132 million in fiscal first and second quarters, respectively, the company invested $174 million in new land acquisitions in fiscal third quarter.

KB Home expects land investments to drive additional community openings throughout 2020. The company also intends to generate year-over-year growth in average community count in the mid-single digit range in fiscal 2020.

Notably, during the fiscal first, second and third quarters, the company achieved 10%, 17% and 18% improvement in average community count, respectively, with growth in each of the regions served. KB Home also expects average community count to increase 10% and 12% year over year, respectively, in fiscal fourth quarter and 2019.

The company is also focused on its core KB2020 business strategy which aims to boost scale in existing geographic footprint, improve profitability per unit, increase operating margin, drive earnings and generate positive cash flow to redeploy growth as well as reduce debt.

Coming to price performance, KB Home’s shares have outperformed its industry so far this year. The stock has surged 81% compared with the industry’s 49.9% rally in the said period. The upside was primarily backed by an impressive earnings surprise history, having surpassed the Zacks Consensus Estimate in each of the trailing 14 quarters.



Zacks Rank & Other Key Picks

Currently, KB Home sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Other top-ranked stocks in the same space include M/I Homes, Inc MHO, Meritage Homes Corporation MTH and PulteGroup, Inc PHM, each sporting a Zacks Rank #1.

M/I Homes current-year earnings are expected to rise by 31.9%.

Meritage Homes has three-five year expected earnings per share growth rate of 8.5%.

PulteGroup earnings surpassed estimates in all of the trailing four quarters, the average being 10.5%.

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M/I Homes, Inc. (MHO) : Free Stock Analysis Report
 
KB Home (KBH) : Free Stock Analysis Report
 
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Meritage Corporation (MTH) : Free Stock Analysis Report
 
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