KB Home (KBH), the Los Angeles-based homebuilder that targets first-time buyers, reported a narrower first-quarter loss on higher sales and lower impairments.
The net loss for the three months ended Feb. 29 shrank to $45.8 million, or 59 cents a share, from $114.5 million, or $1.49, a year earlier, the company said today in a statement. Analysts expected a loss of 23 cents a share, the average of 17 estimates in a Bloomberg survey. The year-earlier results included a $53.7 million impairment and a loss on a loan guaranty of $22.8 million, both related to the company’s investment in a project near Las Vegas.
While KB Home shares have soared this year as the housing market shows signs of life, the company is struggling to reach profitability in part because it is saddled with debt, according to Megan McGrath, an analyst with MKM Partners LP in Greenwich, Connecticut. KB Home climbed 67 percent this year through yesterday, the best performance in the Standard and Poor’s 1500 Homebuilding Index. (S15HOME)
“Investors are expecting a company that has made this much of a run to have made more progress toward profitability,” McGrath, who has a sell rating on KB Home, said by telephone before the results were announced.
Optimism among homebuilders has been improving in recent months. A National Association of Home Builders/Wells Fargo measure of confidence held in March at the highest level since June 2007 as sales expectations climbed. Housing starts fell 1.1 percent in February from a three-year high while building permits increased to a 717,000 annual pace, the most since October 2008, Commerce Department figures showed March 20.
KB Home’s orders fell 8 percent in the first quarter from a year earlier to 1,197 homes. Revenue increased 29 percent to $254.6 million. The company delivered 1,150 homes, up 21 percent from the first quarter of 2011.
The results were announced before the start of regular U.S. trading. KB Home fell 7 cents to $11.24 yesterday in New York.
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