Making fresh three-year highs, shares of homebuilder KB Home (KBH 19.53, +0.21) cozy up to gains of 1.1% today in reaction to last night’s Q1 beat and FY17 guidance raise.
For those who may not be familiar with KBH, the Los Angeles-based homebuilder has built about 600,000 homes since being founded in 1957 and as of February 28, 2017 had a total home backlog just shy of 4,800 carrying a value of just under $1.8 million.
Getting back to the Q1 print, KBH reported a strong top and bottom line with GAAP earnings per share (EPS) of $0.15 on revenues which rose about 20.7% to $818.6 million. Housing gross profit margin decreased 140 basis points to 14.6%, which included 50 basis points of inventory-related charges.
KBH also reported strong deliveries for the quarter of 2,224 homes, up 14% on increases across the company’s four operating regions .Net orders for the quarter were up 14% to 2,580, and net order value grew 32% to $1.09 billion. Additionally, average selling price was up 6% to $364,600 while the average selling price of homes in the backlog increased 12%.
Additionally, on the conference call, management noted their encouragement on the strong start to the spring selling season. Further, management gave guidance on the call for Q2 housing revenues between $880-940 million with full year homebuilding revenues in the range of $4.0-4.3 billion, up from $3.8-4.2 billion. The company also sees Q2 average selling price in the range of $387,000-392,000 with full year ASP of $385,000-395,000.
In all, the strong backlog and earnings beat seem to be driving the gains today. The pullback post-open may be attributed to the run up into the print, +22.9% YTD, as the stock has handily outperformed the broader market since the start of the year (S&P +5.1% YTD).