What Happened?
Shares of homebuilder KB Home (NYSE: KBH) jumped 7.2% in the afternoon session after the company announced the grand opening of several new home communities across California, Arizona, and Florida. The homebuilder revealed two new communities in Roseville, California, with prices starting from the low $600,000s. Additionally, KB Home opened a new community in San Tan Valley, Arizona, and another in St. Cloud, Florida, with homes in both locations priced from the low $300,000s. These openings in desirable locations suggested an expansion of the company's footprint. The announcements pointed to the company's efforts to grow its presence in key housing markets, which investors viewed favorably.
The shares closed the day at $61.66, up 6.5% from previous close.
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What Is The Market Telling Us
KB Home’s shares are somewhat volatile and have had 10 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 10 months ago when the stock gained 14% on the news that the company reported strong fourth-quarter results that exceeded analysts' backlog expectations, as 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.
KB Home is down 4.6% since the beginning of the year, and at $61.66 per share, it is trading 27.5% below its 52-week high of $85.03 from November 2024. Investors who bought $1,000 worth of KB Home’s shares 5 years ago would now be looking at an investment worth $1,645.
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