KB Home shares soared early Tuesday as the company announced better-than-expected results for the fiscal fourth quarter, highlighting double-digit growth in deliveries and net orders. The earnings per share surged to $2.52 for the quarter ending on November 30, up from $1.85 in the previous year. This figure surpassed analyst expectations, which had been pegged at $2.44 as per FactSet.
Revenue for the quarter also rose by an impressive 19% year over year, reaching $2 billion and exceeding the market's projected revenue of $1.99 billion. The stock experienced a notable increase of 9.3% in premarket trading. Chief Executive Jeffrey Mezger stated, "We had a strong finish to 2024, with significant year-over-year growth in our fourth-quarter revenues and diluted earnings per share.
Our higher revenues reflected an increase in deliveries, which were driven by faster build times." Total homebuilding revenue amounted to $1.99 billion, a significant rise from $1.67 billion in the same quarter the previous year. The number of homes delivered rose by 17% year over year to 3,978, with the average selling price increasing by 3% to $501,000.
Net orders surged by 41% to 2,688 homes, as Mezger noted that "buyers continued to demonstrate a desire for homeownership and housing market conditions improved relative to last year, despite ongoing mortgage interest rate headwinds." The company's housing gross profit margin increased slightly to 20.9% from 20.7% in the previous year.
Overall homebuilding costs and expenses totaled $1.76 billion, compared to $1.48 billion in the prior-year period. Looking ahead, for the full year 2025, KB Home is anticipating housing revenue to fall between $7 billion and $7.5 billion, a notable increase compared to the $6.9 billion recorded in the previous year.
In a September update, KB Home's senior management indicated expectations of approximately $7.5 billion in housing revenue for the ongoing year. The anticipated housing gross profit margin has been estimated to be in the range of 20% to 21%. Mezger commented, "In 2025, we will remain focused on expanding our scale, profitability, and returns.
We believe we are poised for growth having invested over $2.8 billion in land acquisition and development in 2024, and we plan to increase our investment again in 2025." For the current three-month period, the homebuilder projects housing revenue between $1.45 billion and $1.55 billion, expecting a housing gross profit margin of between 20% and 20.4%, as stated by Chief Financial Officer Jeff Kaminski during the earnings call, which was transcribed by FactSet.
"This gross margin outlook assumes the market conditions we experienced in 2024 with persistently elevated mortgage interest rates will continue," Kaminski added..