KB Home Falls Most in a Year After Quarterly Earnings Miss

  • Bad weather, labor shortages delayed some home deliveries
  • Shares fall 15%, the biggest decline since last January

KB Home plunged the most in a year after reporting fiscal fourth-quarter earnings that missed analysts’ estimates, as bad weather and labor shortages delayed some deliveries.

Net income for the three months through November was $44 million, or 43 cents a share, according to a statement Thursday. That compares with $852.8 million, or $8.36 a share, a year earlier, when the company reported a reversal of $825.2 million of its deferred tax asset valuation allowance. The average of 17 analyst estimates was for earnings of 50 cents a share, according to data compiled by Bloomberg.

“This was a ‘must execute’ quarter in which the company did not perform,” Megan McGrath, an analyst with MKM Holdings LLC in Stamford, Connecticut, said in an e-mail. “It’s hard to separate out how much of today’s stock weakness is company-specific vs. market-related, but in a market that’s nervous, the impact of missing earnings is even more outsized.”

KB Home tumbled 15 percent, the most since last January, to $10.05. It was the biggest loss in the Standard & Poor’s Supercomposite Homebuilding Index, which dropped 4.2 percent. The broader S&P 500 index fell 2.4 percent. U.S. stocks have had the worst ever four-day start to a year as investors seek havens from global turmoil ranging from China’s weakening currency to the oil slump.

Weather ‘Hiccup’

KB Home’s fourth-quarter earnings were hurt by delayed deliveries of homes due to rain in Texas and Colorado, along with $5.1 million of inventory impairment and land option contract abandonment charges, Chief Executive Officer Jeffrey Mezger said.

“We had a hiccup due to weather delays and we missed a few deliveries,” Mezger said in a phone interview. “We have good momentum. The markets are solid and predictable, and the demand is there.”

KB Home’s average selling price increased 8 percent in the quarter from a year earlier to $379,800. Revenue jumped 24 percent to $985.8 million, and deliveries increased 16 percent.

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