KB Home (NYSE:KBH) shares are tanking in the early session today after the homebuilder announced its results for the fourth quarter. Revenue declined by 13.9% year-over-year to $1.67 billion, while EPS of $1.85 came in better than expectations by $0.15.
During the quarter, the number of home deliveries dropped by 10% to 3,407. Additionally, the average selling price per unit trended lower to $487,300 from $510,400. In contrast, net orders in Q4 shot up by 176% to 1,909, reflecting improving demand dynamics. The company had a backlog of 5,510 units at the end of the quarter.
Additionally, KBH has experienced a “Meaningful sequential increase” in net orders during the first five weeks of Q1 2024. This improving scenario comes as consumers react positively to declining mortgage rates. For Fiscal Year 2024, KBH expects housing revenue to range between $6.4 billion and $6.8 billion. The average selling price is anticipated to hover between $480,000 to $490,000 per unit.
Recently, UBS’ John Lovallo raised the price target on KBH to $78 from $63 while reiterating a Buy rating. Seaport Global’s Kenneth Zener, on the other hand, has lowered the rating on the stock to a Hold from a Buy without assigning a price target.
Is KBH a Good Stock to Buy?
Today’s price correction comes after a nearly 81% rally in KBH shares over the past year. Overall, the Street has a Moderate Buy consensus rating on KB Home, and the average KBH price target of $61.90 implies the stock may be hovering around fair valuation levels at present.
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