KB Home (KBH) Unveils Santa Rita Ranch Community In Vail

KB Home (NYSE:KBH) recently announced the opening of Santa Rita Ranch community in Vail, AZ. Year to date, the stock has gained over 22%, better than loss of over 6% for the Zacks categorized Building-Residential/Commercial industry.

The community’s location will provide its potential buyers easy access to major transportation routes and employers in Tucson. Along with this, attractions like hiking, biking and camping in the nearby Santa Rita Mountains, Saguaro National Park and Coronado National Forest will be within reach.

All houses in Santa Rita Ranch will be designed in an energy- and water-efficient manner since KB Home uses ENERGY STAR certification and WaterSense-labeled faucets and water fixtures. These features help owners reduce their monthly utility bills.

KB Home has been focusing on several strategic initiatives over the last few years to drive profit and revenues. One of its primary targets has been to increase community count.

The company regularly opens communities in highly favorable submarkets to drive growth. KB Home recently-opened communities include Talesera Hills in Las Vegas, Sonoran Ranch II in Tucson and Cedar Brook in Houston.

However, at the end of the last reported quarter, average community count was 235, down 9% year over year. It is expected to drop further in the fourth quarter by about 8% year over year. Nonetheless, these new communities can be expected to increase the community count sequentially from the first quarter of fiscal 2017.

Housing demand is expected to increase in the near term, considering the overall strong macro environment. Improving labor markets, declining unemployment rates, low mortgage rates and limited home supply are supporting a continued rise in home prices, thereby booting homebuilders’ top line.

Investors should note that KB Home has a decent earnings history, beating estimates in three of the past four quarters at an average of 6.38%. In the last quarter, the company posted an earnings surprise of 7.69%.

KB HOME Price

KB Home carries a Zacks Rank #3 (Hold).

Stocks to Consider

Better-ranked stocks in the industry include Beazer Homes USA, Inc. (NYSE:BZH) , Hovnanian Enterprises Inc. (NYSE:HOV) and Toll Brothers Inc. (NYSE:TOL) .

All three companies carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1(Strong Buy) Rank stocks here

Fiscal 2017 earnings for Beazer are expected to decline 2.8%.

Hovnanian is expected to witness significant growth in fiscal 2016 earnings.

Fiscal 2016 earnings for Toll Brothers are expected to rise 21.9%.

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