KB Home to Report Q4 Earnings: What's in Store for the Stock?

Earnings Report and Expectations - KB Home is scheduled to report Q4 fiscal 2024 results on January 9, after market close [1] - In the last quarter, adjusted earnings met consensus estimates while revenues exceeded by 1.5%, with both metrics increasing year-over-year [2] - Earnings have topped consensus estimates in three of the last four quarters, with an average surprise of 10.8% [2] Earnings and Revenue Trends - The Zacks Consensus Estimate for Q4 adjusted earnings has been revised downward to $2.45 per share from$2.47, but still indicates a 32.4% increase from the year-ago quarter's $1.85 per share [3] - Revenue consensus estimate is$1.99 billion, a 19% increase from the prior-year quarter [3] Revenue Drivers - Revenue growth is expected due to strong demand for affordably priced personalized homes and improving housing market trends, including homebuyers adjusting to new mortgage rates and an improved job environment [4] - Housing revenues are anticipated to be between $1.94-$2.04 billion, up from $1.66 billion a year ago, with an average selling price (ASP) of$510,000, up from $487,300 [5] - Model predicts housing revenues to increase 18.6$1.97 billion, with ASP rising 5% to $511,600 and home deliveries increasing 13% to 3,850 units [6] Margins and Costs - Higher construction and land costs may pressure margins, but initiatives like the Returns-Focused Growth Plan and Built-to-Order approach are expected to offset these challenges [7] - Homebuilding operating margin is expected to be between 11.4% and 11.8%, up from 10.9% a year ago [8] - Housing gross margin is projected to be 21-21.4%, up from 20.8%, with SG&A expenses as a percentage of housing revenues likely to decrease to 9.6% from 9.9% [9] Orders and Backlogs - New orders are expected to increase 57.6% year-over-year to 3,008 units, while backlog is expected to decrease to 4,882 units from 5,510 units [11] Earnings Model and Rank - The model does not predict an earnings beat for KB Home this quarter, with an Earnings ESP of -0.48% and a Zacks Rank of 4 (Sell) [12] Other Companies in the Sector - Weyerhaeuser Company (WY) has an Earnings ESP of +27.27% and a Zacks Rank of 1, with Q4 2024 earnings expected to decline 62.5% year-over-year [13][15] - PotlatchDeltic Corporation (PCH) has an Earnings ESP of +420.00% and a Zacks Rank of 3, with Q4 2024 earnings expected to be a loss of one cent compared to break-even a year ago [15][16] - Acuity Brands, Inc. (AYI) has an Earnings ESP of +1.16% and a Zacks Rank of 3, with Q1 fiscal 2025 earnings expected to increase 4.3% year-over-year [14][16]