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KB Home (KBH) Boosts Community Count With Bella Cortina


KB Home KBH recently announced the opening of a riverside home community in Rancho Belago, Moreno Valley — the Bella Cortina.

Offering a convenient location and easy conveyance, the community is located near major employment and education centers with adequate dining, shopping and entertainment facilities.

With a plan of launching 159 new homes at Bella Cortina, KB Homes will offer spacious houses with efficient energy and water saving systems that will help the residents save on utility bills.

Notably, one of KB Home’s key business strategies is to drive revenues through growth in community. In fact, over the last three years, the company has focused on four strategic initiatives to drive profits and revenues, ensuring success in fiscal 2017 and beyond. These initiatives include boosting community count, achieving higher revenue per community with a higher profitability per unit, and increasing asset efficiency through return on capital invested.

In fact, the company announced the opening of six new community homes in less than a month’s time. Compass in Hayward, Highland Villas in Aurora and Montaretto Estates in Tuscon are the company’s latest home communities.

However, average community count in the first nine months of fiscal 2017 was 236, reflecting a decline of 1.3% from the year-ago level. For fiscal 2017, the company expects community count to remain flat as well. Despite challenges like higher cost of labor and supply constraints in the U.S. homebuilding space, KB Home is adopting various initiatives to drive community count in order to acquire higher revenue per community.

In fact, KB Home had witnessed higher housing revenues in the first nine months of fiscal 2017. Homebuilding revenues grew 23.5% year over year to nearly $3 billion, driven by double-digit increase in the number of homes delivered. Number of homes delivered jumped 11.8% to 7,569 homes, buoyed by double-digit increase in the company's West Coast, Southwest and Central regions in the same time frame.

Further, for fiscal 2017, the company expects homebuilding revenues at around $4.3 billion, highlighting the midpoint of the previously guided range of $4.2-$4.4 billion, reflecting 20% growth from the 2016 level.

Notably, in the last 60 days, the Zacks Consensus Estimate for current quarter and year earnings has gone up 1.4% and 2.4%, respectively, reflecting analyst optimism.

Also, this Zacks Rank #2 (Buy) company’s shares have outperformed the industry year to date. The stock has rallied 64%, compared with the 40.5% gain of the industry.

Other Stocks to Consider

Other top-ranked stocks in Construction sector include Persimmon plc PSMMY, Beazer Homes USA, Inc. BZH and Rayonier Inc. RYN. While Persimmon sports a Zacks Rank #1 (Strong Buy), Beazer Homes and Rayonier carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Persimmon’s current-year earnings are projected to grow 18.3%.

Beazer Homes’ current-quarter earnings are expected to increase 60.6%

Current-year earnings for Rayonier are expected to increase 4.8%.

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