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Breaking: KB Home (NYSE: KBH) On The Verge of a Selling SpreeShares of KB Home (NYSE: NYSE:KBH ) saw a 7% downtick early morning in Tuesday's premarket session breaking below the psychological support point of $60 enroute towards a selling spree. Operating as a homebuilding company in the United States, the company operates through four segments: West Coast, Southwest, Central, and Southeast. It builds and sells a variety of homes, including attached and detached single-family residential homes, townhomes, and condominiums primarily for first-time, first move-up, second move-up, and active adult homebuyers. Yesterday after market close KB Home report earnings results, posting lower profit and revenue in its fiscal first quarter, hurt by softer-than-expected demand. KB Home shares have declined 10% over the past year due to affordability pressures and elevated interest rates, with Q1 results showing significant demand slowdown. The company reported weak Q1 financials, with earnings and revenue misses, a 9% drop in deliveries, and a 17% fall in net orders. Elevated interest rates and increased supply have pressured margins and demand, particularly affecting first-time buyers, leading to reduced revenue guidance and operating margin Financial Performance In 2024, KB Home's revenue was $6.93 billion, an increase of 8.10% compared to the previous year's $6.41 billion. Earnings were $650.19 million, an increase of 10.97%. Technical Outlook As of the time of writing, shares of NYSE:KBH are down 7.20% on Tuesday's premarket trading with the asset facing selling pressure, should the RSI which is currently at 48 dip to 40, a bearish campaign would be inevitable- similarly, a move above the $72 pivot could change the course for NYSE:KBH shares. Analyst Forecast According to 13 analysts, the average rating for KBH stock is "Hold." The 12-month stock price forecast is $75.5, which is an increase of 22.19% from the latest price.
NYSE:KBHShort
by DEXWireNews
KB Home Strong Revenue Growth Fails to Impress InvestorsDespite beating revenue expectations, KB Home (NYSE: NYSE:KBH ) saw its stock drop sharply after its Q3 CY2024 earnings report. The homebuilder's robust revenue growth of 10% year-over-year, reaching $1.75 billion, coupled with strong net earnings per share ($2.04), failed to prevent a significant decline in after-hours trading, where shares dropped 6%. This price action has left many investors questioning the sustainability of KB Home's stock, particularly amid rising interest rates and shifting housing demand. Fundamental Overview At first glance, KB Home’s fundamentals appear solid. Revenue of $1.75 billion exceeded analyst estimates of $1.73 billion by a margin of 1.4%, and their profit per share came in at $2.04, only slightly missing the consensus of $2.06. The company’s sales were buoyed by strong demand for affordably priced homes, especially as mortgage rates saw some moderation toward the end of the quarter. However, several metrics raised concerns: 1. Gross Margin Decline: KB Home (NYSE: NYSE:KBH ) reported a 20.6% housing gross profit margin for Q3 2024, down from 21.5% in the same quarter last year. The slight decline reflects a mix of geographic factors and rising construction costs, particularly as the company expanded into different markets. 2. Backlog Decline: The company's backlog, a key indicator of future revenue, dropped 14% year-over-year to $2.92 billion, reflecting slower future sales growth. This decline, coupled with flat net orders for the quarter, is a worrying sign that demand might be softening in the coming quarters. 3. Inventory Build-Up: Inventories increased by 10%, indicating a cautious approach by the company, perhaps anticipating further slowdowns in demand or higher costs to meet future projects. 4. Capital Deployment: KB Home (NYSE: NYSE:KBH ) has focused on returning capital to shareholders, repurchasing $150 million in stock during the quarter, which brings their total repurchases for the year to $250 million. This capital deployment strategy reflects confidence in their long-term prospects, despite near-term headwinds. Technical Outlook Technically, NYSE:KBH was trading in a long-standing rising trend before the earnings report. The stock’s year-to-date performance had been impressive, rising nearly 40% through Tuesday's close. However, after the earnings release, the stock dipped 6% in after-hours trading, signaling potential bearish momentum. Key technical indicators to watch: 1. Ascending Triangle Breakdown: Prior to the earnings release, NYSE:KBH was forming an ascending triangle, a bullish pattern suggesting the potential for a breakout. However, the failure to surpass the upper trendline combined with below-expectation EPS has triggered a breakdown below the lower trendline, indicating that further price correction may be in play. 2. Support Levels: Investors should closely watch the following support levels: - $79: A key pivot where the stock found support between July and early September. A break below this level could lead to a stronger selloff. - $72: This level coincides with the rising 200-day moving average, a critical support line from a technical standpoint. If the stock falls here, it may attract buyers seeking a longer-term opportunity. - $64: If bearish momentum accelerates, this level would mark a significant retracement to the consolidation range seen earlier this year, potentially representing a more substantial correction. 3. Relative Strength Index (RSI): On Tuesday, KB Home (NYSE: NYSE:KBH ) closed with an RSI of 60.65, suggesting that the stock was neither overbought nor oversold. As of Wednesday morning pre-market trading, the stock was down 6.78%, and the RSI has dropped, signaling that the stock is approaching oversold territory. This dip could indicate a short-term buying opportunity if it stabilizes around key support zones. Market Dynamics and Interest Rates While KB Home (NYSE: NYSE:KBH ) managed to grow revenues and deliver solid earnings, the broader macroeconomic environment is weighing heavily on the stock. Elevated mortgage rates, which have been rising due to the Federal Reserve’s tightening cycle, continue to act as a headwind for homebuilders like KB Home (NYSE: NYSE:KBH ). The third quarter saw some softening in demand, particularly in June and July, as potential homebuyers struggled with the affordability crisis driven by higher rates. However, in August, as mortgage rates slightly moderated, KB Home (NYSE: NYSE:KBH ) noted an uptick in net orders. This underscores the sensitivity of the housing market to even small changes in interest rates. A sustained decrease in rates could drive renewed demand, especially for KB Home’s affordably priced homes. Long-Term Prospects and Guidance Looking ahead, KB Home (NYSE: NYSE:KBH ) remains optimistic, providing guidance for full-year 2024 housing revenues between $6.85 billion and $6.95 billion, with an average selling price of approximately $490,000. The company expects its homebuilding operating income margin to hover between 11.1% and 11.2%, assuming no significant inventory-related charges. CEO Jeffrey Mezger highlighted the company’s focus on both reinvestment and returning capital to shareholders, including their aggressive stock buyback program. The company’s investments in land acquisition and development are up 59% year-over-year, signaling a long-term commitment to growth even amid challenging market conditions. Conclusion: KB Home’s Q3 CY2024 performance demonstrates a strong foundation with decent revenue growth, solid earnings, and a disciplined approach to capital deployment. However, investors have reacted negatively due to lower margins, flat net orders, and concerns about the broader housing market. Technically, the stock appears to be at a critical juncture. The breakdown of the ascending triangle, combined with a sharp post-earnings selloff, suggests further downside potential. Investors should closely monitor support levels around $79 and $72 for potential buying opportunities. From a long-term perspective, the company’s investments in land and its ability to maintain profitability in a tough market are positive signs. However, until mortgage rates stabilize, the stock may remain volatile in the near term. That said, any signs of rate moderation could lead to a sharp rebound, especially given the company’s positioning in the affordable housing market.
NYSE:KBHShort
by DEXWireNews
2
TRADE IDEA OF THE WEEK IN KB HOME INC KBH!Overall we are seeing some weakness in the market right now. Something that we're seeing is a lot of the sector/stocks have rejected the 21 period moving average, which tells me that there's a somewhat good chance that we might go test the lows that were created 2 weeks ago. This stock KB HOME INC is an example of a stock that has rejected that 21 period moving average shown by the green line on the chart! If the market continues to show overall weakness this week, then this is a high probability setup to move lower and that's what we're banking on here. Really the only sector that looks strong to us right now is the Semiconductor/Technology Sector. Stocks like NVDA, AMAT, ON, MU, etc. held up the market today from being even worse. Good luck to you all!
NYSE:KBHShort
by StrengthTrading
2
Sep 28 Earnings: KB Home - Will The Recovery Continue?KB Home has been gaining steadily with the recovery in the housing market since 2009. The industry as a whole is enjoying solid demand from a recovering economy and a limited inventory. KB Home has been enjoying a steady boost to its business from increased rentals. The company has put effort on increasing revenues per community and profits per unit, boosting its growth factors. Negative factors for the quarter include higher interest rates, limiting industry growth. Higher construction, wage and material costs should dampen margins going forward and effect guidance. I believe the company will perform well post-earnings release and give a $24.00 PT. 30 to 60 day time frame.
NYSE:KBHLong
by TraderDanER