In premarket trade on Thursday, shares of the California-based builder were up after the business posted higher results than anticipated Wednesday. The company’s second-quarter revenue was $1.72 billion, and its second-quarter earnings per share were $2.32. FactSet’s consensus forecast is for earnings per share of $2.04 on sales of $1.65 billion. The firm reported a 55% increase in earnings per share compared to the same period the previous year.
Increases in mortgage rates and inflation are slowing down sales, according to CEO Jeffrey Mezger. According to him, the company’s business strategy of constructing houses after they’ve been ordered “will allow us to adapt to these shifting market circumstances,” he said. As a custom home builder, KB Home provides a wide range of floor plans at various pricing ranges, according to the CEO. A crucial reason for maintaining one of the greatest absorption rates in the business for many years, according to him, is that “our approach connects with purchasers.”
Although revenues are down, the business indicated it would stick to its original forecast. This year, KB Home estimates 2022 housing revenue in the range of $11 to $110.5B, with an average selling price of roughly $500,000.
As of early Thursday, KB Home’s stock was up 4.7% after ending with a gain of 2.4% on Wednesday’s normal trading session. To make up for a lost time, the stock still has a long way to go to catch back up. This year, the stock has lost nearly 41% of its value.
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