KB Home (NYSE: KBH) Q3 earnings miss estimates

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KB Home (NYSE: KBH) a well-known establishment in the residential building market saw a dip of 97 cents in its shares recently. The close was at $16 this Wednesday morning which meant a 6% decline of KB Home (NYSE: KBH) shares in the pre-market trading. Although the third quarter net total is said to have increased according to the reports released by the company, the profit figures were much less than the expectations of the analysts.

Bloomberg recommended analysts had assessed a 4 cents increase in the diluted share per annum, however the company’s total earning only increased by 28 cents per year, making the net earnings $28.4 million per annum. This difference is quite apparent to have caused a decline in shares.

Only a year ago KB Home (NYSE: KBH) built 1,825 houses but the company couldn’t sustain the building pattern and this year’s figures went down to a disappointing 1,793 in the third quarter. This alarming decrease has several reasons, but failure to meet deadlines and failure to close customer mortgage loans played a primary role.

However, even after delays and other issues that the company had, a 9% increase was observed in the sale prices. This has brought about positive changes to the revenue. Last year, the company was selling at $299,100 which has gone up to $327,000 for the current year, leading to a quarter revenue of $548.9 million to the total of $58.2 million.

For the current year, the company has changed its strategy and is more focused on the land constrained market that attracts higher house hold incomes and the customer is more interested in bigger residential properties. This has led to an increase in the selling price for the last 17 quarters.

According to the company’s financial report, KB Home (NYSE: KBH) backlog had gone up by 13% and only generated 3432 homes by the end of August. It is estimated that in comparison to last year’s backlog revenue of $808.5 million, the company is expected to succeed in taking this amount up to $1.1 billion this year. These figures will be the highest revenues achieved so far since 2008’s third quarter.

A significant increase of 35% in the building pattern in the West Coast has been reported. Furthermore, three more sites have reported an increase in growth per annum as well. These figures have led to a quarterly value summing up at 19% to $629.2 million. Despite several fall backs for the past few months, KB Home (NYSE: KBH) has succeeded in instigating impressive revenues by taking some correct strategic decisions.

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