The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how KB Home (NYSE:KBH) and the rest of the home builders stocks fared in Q1.
Traditionally, homebuilders have built competitive advantages with economies of scale that lead to advantaged purchasing and brand recognition among consumers. Aesthetic trends have always been important in the space, but more recently, energy efficiency and conservation are driving innovation. However, these companies are still at the whim of the macro, specifically interest rates that heavily impact new and existing home sales. In fact, homebuilders are one of the most cyclical subsectors within industrials.
The 10 home builders stocks we track reported a slower Q1. As a group, revenues were in line with analysts’ consensus estimates.
While some home builders stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 2.2% since the latest earnings results.
KB Home (NYSE:KBH)
The first homebuilder to be listed on the NYSE, KB Home (NYSE:KB) is a homebuilding company targeting the first-time home buyer and move-up buyer markets.
KB Home reported revenues of $1.39 billion, down 5.2% year on year. This print fell short of analysts’ expectations by 6.5%. Overall, it was a disappointing quarter for the company with full-year revenue guidance missing analysts’ expectations and a miss of analysts’ adjusted operating income estimates.
“Consumers are working through affordability concerns and uncertainties related to macroeconomic and geopolitical issues, which are causing them to move slowly in their homebuying decisions,” said Jeffrey Mezger, Chairman and Chief Executive Officer.
KB Home Total Revenue
KB Home delivered the weakest performance against analyst estimates of the whole group. Unsurprisingly, the stock is down 12.7% since reporting and currently trades at $53.96.
Named “America’s Most Trusted Home Builder” in 2019, Taylor Morrison Home (NYSE:TMHC) builds single family homes and communities across the United States.
Taylor Morrison Home reported revenues of $1.90 billion, up 11.5% year on year, outperforming analysts’ expectations by 5.7%. The business had a strong quarter with an impressive beat of analysts’ EBITDA estimates.
Taylor Morrison Home Total Revenue
Taylor Morrison Home scored the biggest analyst estimates beat and fastest revenue growth among its peers. However, the results were likely priced into the stock as it’s traded sideways since reporting. Shares currently sit at $58.67.
Based in Texas, LGI Homes (NASDAQ:LGIH) is a homebuilding company specializing in constructing affordable, entry-level single-family homes in desirable communities across the United States.
LGI Homes reported revenues of $351.4 million, down 10.1% year on year, falling short of analysts’ expectations by 5%. It was a disappointing quarter as it posted a significant miss of analysts’ adjusted operating income estimates.
As expected, the stock is down 5.3% since the results and currently trades at $56.10.
One of the largest homebuilders in America, Lennar (NYSE:LEN) is known for constructing affordable, move-up, and retirement homes across a range of markets and communities.
Lennar reported revenues of $7.63 billion, up 4.4% year on year. This result topped analysts’ expectations by 2%. More broadly, it was a mixed quarter as it also recorded an impressive beat of analysts’ EPS estimates but a miss of analysts’ backlog estimates.
The stock is down 9.5% since reporting and currently trades at $108.64.
Founded in 1977, Installed Building Products (NYSE:IBP) is a company specializing in the installation of insulation, waterproofing, and other complementary building products for residential and commercial construction.
Installed Building Products reported revenues of $684.8 million, down 1.2% year on year. This print beat analysts’ expectations by 1.5%. Taking a step back, it was a satisfactory quarter as it also logged a solid beat of analysts’ organic revenue estimates but a significant miss of analysts’ EPS estimates.
The stock is down 1.8% since reporting and currently trades at $160.96.
In response to the Fed’s rate hikes in 2022 and 2023, inflation has been gradually trending down from its post-pandemic peak, trending closer to the Fed’s 2% target. Despite higher borrowing costs, the economy has avoided flashing recessionary signals. This is the much-desired soft landing that many investors hoped for. The recent rate cuts (0.5% in September and 0.25% in November 2024) have bolstered the stock market, making 2024 a strong year for equities. Donald Trump’s presidential win in November sparked additional market gains, sending indices to record highs in the days following his victory. However, debates continue over possible tariffs and corporate tax adjustments, raising questions about economic stability in 2025.
Want to invest in winners with rock-solid fundamentals? Check out our Strong Momentum Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
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