KB Home fell the most in a month after the Los Angeles-based homebuilder reported order growth that analysts said was less than that of the company’s competitors.
The stock dropped 6.4 percent to $15.60 in New York, its biggest drop since Nov. 12. The 11-member Standard & Poor’s homebuilder index gained 0.3 percent.
KB Home’s “order trends were disappointing,” Vincent Foley, a credit analyst with Barclays Plc, wrote in a note to investors today.
The builder’s net orders rose 4.2 percent in the three months ended Nov. 30 from a year earlier, to 1,557 homes, it said today in a statement. The company’s orders per average community rose 11 percent in the 2012 fiscal year, less than the average of about 30 percent among other builders, according to Adam Rudiger, an analyst with Wells Fargo & Co.
“We believe the company will need to aggressively open communities early in 2013 in order to generate order growth in line with peers,” Rudiger wrote in a note to investors today. He has a market perform rating on KB Home, the equivalent of a hold.
The builder said it had 191 new-home communities open for sales at the end of the fiscal fourth quarter, down 18 percent from a year earlier. KB Home’s revenue climbed 20 percent to $578.2 million. The company’s contract backlog, an indication of future sales, rose 35 percent to $618.6 million.
Low mortgage rates and a shrinking inventory of existing homes are giving homebuilders more customers. Confidence among U.S. builders climbed in December for the eighth straight month, reaching its highest level in more than six years, according to the National Association of Home Builders/Wells Fargo index of builder sentiment, released earlier this week.
KB Home had fourth-quarter net income of $7.7 million, or 10 cents a share, down from $13.9 million, or 18 cents, a year earlier, the company said today. The average of 21 estimates in a Bloomberg survey was for earnings of 6 cents a share. In the year-earlier period, KB Home had gains of $19.8 million related to ending a mortgage-banking joint venture and $6.6 million from a loan guarantee.
KB Home stock has gained 132 percent this year, compared with an 87 percent increase in the S&P homebuilding index.