KB Home is poised to exceed Wall Street's expectations for its fiscal fourth-quarter earnings, according to a recent note from Wedbush Securities. The brokerage anticipates the homebuilder will reveal per-share earnings of $2.50 for the quarter ending November 30, slightly ahead of the consensus estimate of $2.45 found on FactSet.
Notably, sales are expected to increase by 19% year over year, reaching around $2 billion, aligning with market predictions. Analysts surveyed by FactSet are estimating KB Home will report revenue of approximately $1.99 billion for the quarter. Scheduled to unveil its latest financial results next week, KB Home previously reported an earnings per share (EPS) of $2.04 and revenue of $1.75 billion in the third quarter.
Wedbush's projections suggest that KB Home will experience a 14% annual boost in home deliveries, elevating the total to 3,900 homes, and will see a 5% uptick in the average selling price, reaching around $510,000. The brokerage projects a 30-basis point increase in gross margin to 21.1%, which they attribute to the company needing to stay competitive regarding pricing and incentives in previous quarters. For the fourth quarter, Wedbush forecasts a 10% increase in orders, estimating a total of 2,100 homes sold, compared to the consensus expectation of a 13% rise.
This comes after the company reported in the prior three-month period that orders fell short of the 10% increase predicted by Wedbush, largely due to competitive pressures from discounting practices among competitors. Analysts Jay McCanless and Brian Violino articulated these risks in their commentary, noting similar threats could affect the fourth-quarter estimates. In addition to earnings, investors will be seeking updates on KB Home’s ongoing search for a new chief financial officer (CFO), following the announcement that Jeff Kaminski will retire from his position in early 2025, a role he has held for over 14 years. During its third-quarter earnings call, KB Home's senior management expressed confidence in achieving roughly $7.5 billion in housing revenue for fiscal 2025, with Wedbush estimating a 9% improvement in this figure due to a projected 6% increase in unit closures and a 3% rise in average closing prices for the fiscal year 2025. Wedbush has maintained a neutral rating on KB Home's stock, setting a 12-month price target of $75..