Why Is KB Home (KBH) Up 18.6% Since Last Earnings Report?

Core Viewpoint - KB Home reported strong Q2 fiscal 2024 earnings, with both earnings and revenues exceeding estimates, indicating resilience in a fluctuating housing market [2][3]. Earnings & Revenue Summary - Adjusted earnings per share were $2.15, surpassing the consensus estimate of $1.78 by 20.8% and increasing 11% year-over-year from $1.94 [3]. - Total revenues reached $1.71 billion, exceeding the consensus mark of $1.64 billion by 4.3%, but decreased 3.4% year-over-year [3]. Segment Performance - Homebuilding revenues were $1.7 billion, down 3.2% from the prior year, with 3,523 homes delivered, a decrease of 3.9% [4]. - The average selling price (ASP) increased by 0.7% year-over-year to $483,000 [4]. - Net orders rose 1.5% to 3,997 units, with the value of net orders increasing 6.8% to $2.03 billion, reflecting improved demand [4]. - The cancelation rate dropped to 13% from 22% in the previous year [4]. - The backlog totaled 6,270 homes, down 13.9% from the previous year, with potential housing revenues declining 9.8% to $3.12 billion [4]. Financial Position - Cash and cash equivalents were $643.5 million as of May 31, 2024, down from $727.1 million at the end of fiscal 2023 [6]. - Total liquidity stood at $1.73 billion, with a debt-to-capital ratio improving to 29.8% from 30.7% [6]. - The company repurchased approximately 0.76 million shares for $50 million in Q2 2024, with $950 million remaining under the repurchase authorization [6]. Fiscal 2024 Guidance - KB Home raised its housing revenue expectation to the range of $6.70-$6.90 billion, up from $6.50-$6.90 billion previously [7]. - The estimated ASP is now projected between $485,000 and $495,000, an increase from earlier estimates [7]. - The housing gross margin is expected to be between 21% and 21.5%, while the operating margin is projected to be in the range of 11% to 11.4% [7][8]. Market Position and Outlook - KB Home holds a Zacks Rank 1 (Strong Buy), indicating expectations for above-average returns in the coming months [11]. - The company has a subpar Growth Score of D but a better Momentum Score of C, with an aggregate VGM Score of C [10].