What Happened?
Shares of homebuilder KB Home (NYSE:KBH) jumped 5% in the morning session after the company reported strong fourth-quarter results that exceeded analysts' backlog expectations. This figure is a leading indicator of revenue and a major focus of the markets. Its revenue also narrowly outperformed Wall Street's estimates. Management made constructive comments about the macro, noting that "Net orders rose roughly 40% year over year, as buyers continued to demonstrate a desire for homeownership and housing market conditions improved relative to last year". On the other hand, its EBITDA missed and its full-year revenue guidance fell slightly short of Wall Street's estimates. Zooming out, we think this was a mixed quarter. The market seemed to focus on the top-line strength, and the stock traded up.
After the initial pop the shares cooled down to $67.25, up 4.9% from previous close.
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What The Market Is Telling Us
KB Home’s shares are not very volatile and have only had 6 moves greater than 5% over the last year. Moves this big are rare for KB Home and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 4 months ago when the stock dropped 7.1% on the news that the company reported third-quarter earnings results. Its backlog (a leading indicator of future demand) fell short, spooking investors. On the other hand, KB Home beat analysts' revenue expectations during the quarter. In addition, its full-year revenue guidance came in above Wall Street's estimates. Overall, this was a mixed but weaker quarter.
KB Home is up 4.1% since the beginning of the year, but at $67.25 per share, it is still trading 25% below its 52-week high of $89.63 from September 2024. Investors who bought $1,000 worth of KB Home’s shares 5 years ago would now be looking at an investment worth $1,864.
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