KB Home Stock Slips After-Hours On Q1 Revenue Miss, Annual Forecast Cut: Retail Confidence Diminishes

KB Home (KBH) stock fell 7.2% in extended trading on Monday after the company’s first-quarter revenue missed Wall Street’s estimates and it lowered its annual forecast.

The homebuilder’s quarterly revenue fell 5% to $1.39 billion and missed analysts expectations of $1.50 billion.

Its housing gross profit margin fell to 20.2%, compared to 21.5% in the year-ago quarter, primarily due to higher relative land costs and homebuyer concessions.

Elevated interest rates and persistently high inflation have weighed on the demand for homes in the United States. According to a Commerce Department report, new home sales fell by 10.5% in January.

Homebuilders like KB Home and Lennar have resorted to offering incentives to attract potential buyers.

“Consumers are working through affordability concerns and uncertainties related to macroeconomic and geopolitical issues, which are causing them to move slowly in their homebuying decisions,” CEO Jeffrey Mezger said.

The Los Angeles-based company said it delivered 2,770 homes during the first quarter, a 9% decline from a year earlier.

The company’s ending backlog value fell 21% to $2.20 billion compared to last year.

KB Home projected fiscal 2025 housing revenue between $6.60 billion to $7 billion, compared with the earlier forecast of between $7 billion and $7.5 billion.

The company forecast fiscal second-quarter housing revenue between $1.45 billion and $1.45 billion.

“Although we missed our sales goals for the first quarter, we are encouraged by the significant
improvement in weekly sales and normalizing absorption pace over the last five weeks,” Mezger said.

Retail sentiment on Stocktwits slumped further into the ‘extremely bearish’ (1/100) territory than a day ago, while retail chatter was ‘extremely high.’

One retail trader said homebuilders now may have to compete with older home sellers which will lead to further margin compression.

Tracey Ryniec, an equity strategist at Zacks Investment Research, said, “Things will get more difficult for KBH and other homebuilders if they have to lower prices again to make the sales.”

KB Home shares have fallen nearly 6% year-to-date (YTD).

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