Based in Los Angeles, CA, KB Home (NYSE:KBH) recently announced its decision to transition out from the Metro Washington D.C. market. The company expects the process to be completed over the next 12 months.
KB Home will continue to construct and deliver homes in its existing communities in the market. The company will also ensure that its customers get the necessary warranty service and related support in the concerned region. The company intends to build out or sell its remaining land holdings. KB Home expects to incur a pre-tax charge of about $6 million- $8 million in its second quarter 2016 in relation to the transition.
KB Home has about 2% of its community count in the Metro Washington D.C. market. The company failed to generate strong returns from the market due to its inability of grow the scale of business there. Hence, KB Home decided to relocate its resources to markets which promise better returns. KB Home caters to 40 housing markets across 10 states. KB Home depends heavily on the housing market in Central U.S. (Colorado and Texas) and the West Coast (California).
KB Home consistently focuses on the highly favorable housing markets as part of its growth strategy. In fact, strong community count aided the homebuilding company to deliver better-than-expected first quarter 2016 results on Mar 23. Revenues came in higher than anticipated driven by strong housing demand and solid traffic. Going forward, management expects this trend to continue. Strong community count positioned KB Home well to meet strong housing demand in the first quarter of 2016.
KB Home carries a Zacks Rank #3 (Hold).
Stocks to Consider
Investors interested in the construction sector may consider NVR, Inc. (NYSE:NVR) , Sekisui House Ltd. (OTC:SKHSY) and Masco Corporation (NYSE:MAS) . All three companies have a Zacks Rank #2 (Buy).
MASCO (MAS): Free Stock Analysis Report
KB HOME (KBH): Free Stock Analysis Report
NVR INC (NVR): Free Stock Analysis Report
SEKISUI HSE LTD (SKHSY): Free Stock Analysis Report
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Zacks Investment Research
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KB Home (KBH) To Pull Out Of Metro Washington D.C. Market
Published 05/13/2016, 08:53 AM
Updated 07/09/2023, 06:31 AM
KB Home (KBH) To Pull Out Of Metro Washington D.C. Market
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