KB Homes (KBH) reported it’s 4th Quarter November 2020 earnings of $1.12 per share on revenue of $1.2 billion after the close on Tuesday. Analysts had earnings estimates of $0.87 per share on revenue of $1.1 billion. Revenue fell 23.4% compared to the same quarter a year ago. Shares of KB Home rose to $46/sh. after hours Tuesday as the builder beat Wall Street expectations for its fourth quarter. This news came despite rolling “lock down” Covid-19 related problems in the spring. KB Home management reported that it earned $106 million, or $1.12 a share, in the quarter, compared with $1.31 a share in the fourth quarter of 2019.
“Housing market conditions continue to be robust, as the pandemic has helped propel demand for homeownership,” KBH CEO
KB Homes
KB Homes prior to earnings remained firmly below the 50d moving average.
Last year was “extraordinary,” with a 42% year-over-year increase in fourth-quarter net orders, Chief Executive Jeffrey Mezger said in a statement. He also said, KB Home enters 2021 “well positioned to both expand our scale and deliver that growth at superior margins,” He added, “most notably, we expect meaningfully higher revenue and earnings in 2021 to drive significant expansion of our return on equity.”
The real estate sector presents a good investment opportunity as home builders are expected to do exceptionally well this year, thanks to low mortgage rates and demand for new homes rising with more people moving to suburbs.
With this in mind, we are looking for additional trades in the homebuilder industry over the following reporting period. Many of KBH competitors have faired better. Fr example, Beazer homes has remained above its 50d moving average, with better sales and earnings.
Beazer Homes USA
Beazer Homes (BZH) designs, builds and sells single family homes. Analyst estimates for its current year earnings increased 20.6% over the past few weeks, with the company expected to report earnings growth rate for the current quarter of nearly 3% and year-over-year growth of more than 2.0%.
Management own 7.9% of shares outstanding, a rather high percentage compared to its competitors.
Beazer Homes has managed to stay above its 50d moving average.
Beazer Homes earnings have risen during 2020, with the November report of +925% (red circle).
We’re looking for potential trades this earnings season in many of these homebuilding stocks anticpating similar results as KB Homes.
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Happy Trading,
Vinny
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