KB Home (NYSE: KBH) has confirmed that it will release its Q4 2021 earnings on Wednesday, January 12, 2022, aftermarket close.
What to look for
The company is expected to deliver improved Q4 revenue from last year as improved economy, higher deliveries, additional government stimulus, lower borrowing costs, and vaccinations drive encouraged buyers during the quarter. Also, KB Home has a solid backlog level, which indicates considerable growth opportunities and is likely to have been positive during the quarter. Equally solid demand and higher average sales are expected to have expanded margins in Q4, but high labor and material costs are likely to have put pressure on the bottom line.
Earnings: Stockearning’s estimated EPS for fiscal Q4 is expected to be around $1.77 per share representing YoY growth of 58%. In the last report, the company topped analysts' estimates by 2.5%, with a growth of 97.6% YoY. Historical EPS performance shows that the company has topped estimates eleven times (91%) and missed once (8%).
Revenue: KB Home expects revenue of $1.71 billion in the quarter to be reported indicating a YoY increase of 43.6%. In Homebuilding, consensus estimates peg revenue at $1.709 billion, suggesting an increase of over 43% from last year, and land revenues are likely to be around $0.8 million. In addition, KB Home expects the homebuilding operating income margin to improve 11.8% during the quarter, representing a YoY increase of 10.7%.
Stock movement: KB Home shares have been up 28 times following the earnings release in the past 47 quarters. So, the Historical price reaction suggests a 59% probability of share price going up after the company releases its Q4 2021 earnings. According to the Stockearning algorithm, the predicted first-day move is 5%, while the predicted move on the seventh day is 7%.
What analysts are saying
RBC Capital analyst Mike Dahl upgraded the stock to “buy” from “hold” and lowered the price target from $50 to $45. Following the stock's underperformance in 2021, the analyst sees the possibility of relative catchup. Dahl also raises his FY22 EPS forecast by 23 cents to $8.36, claiming investors are "overly pessimistic" about KB Home's profitability and ROE prospects.
Barclays analyst Matthew Bouley reiterated his "buy" rating on the shares and raised his price target from $56 to $57. In the context of a "strong" market for an affordable new building, the analyst believes homebuilder valuations "remain enticing." As a result, in 2022, he stays "slightly more positive" on real estate developers than on construction products.
BofA analyst Rafe Jadrosich reinstated coverage on the stock with a “hold” rating and price target of $47. KB is a well-positioned builder, according to Jadrosich, because of its substantial exposure to first-time homeowners and outstanding execution. However, he anticipates order growth to lag below that of major rivals in the short future.
JPMorgan analyst Michael Rehaut lowered his price target in KBH from $59 to $53 but maintained a “Hold” rating on the shares. According to the analyst, in 2022 and 2023, he expects a "strong industry background" to drive significant earnings growth within the next two years. As a result, he takes a "positive position" in the construction industry.
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