KB Home’s Optimistic Strategy

June 23, 2022

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KB Home’s Optimistic Strategy

Shares of KB Home (NYSE: KBH) went up 2.02% in after-hours trading on Wednesday after the home building company posted positive financial earnings.

Financials: KB Home reported earnings per share of $2.32 and revenue of $1.72 billion; both were better than expected.

The Good: The operating income margin increased 410 basis points while the gross margin grew 25.3%. The net order value shot up 4% to $2.12 billion and the average selling price rose 21%.

Quote: “With our ending backlog of over $6 billion, we are reaffirming our fiscal 2022 guidance, which we believe we are well positioned to achieve.” - Jeffrey Mezger, Chairman, President and CEO.

Potential Problem: The company sees sales rates moderating as “buyers process the impact of higher mortgage interest rates, as well as inflationary pressures.” However, KB Home said that its built-to-order business model can help them navigate these market conditions.

Numbers: KB Home’s stock is down 39% this year. The stock reached an all-time high last spring.

Final Thoughts: It was a strong quarter for KB Home, but given the rising rate environment and a potential recession, it’s a tricky time to invest in a home builder.

Notables

Notable Earnings Today: Darden Restaurants (NYSE: DRI), FedEx (NYSE: FDX), Accenture (NYSE: ACN), Rite Aid (NYSE: RAD), BlackBerry (NYSE: BB), Smith & Wesson Brands (Nasdaq: SWBI), VistaGen Therapeutics (Nasdaq: VTGN), FactSet Research Systems (NYSE: FDS), CalAmp (Nasdaq: CAMP), GMS (NYSE: GMS), Apogee Enterprises (Nasdaq: APOG), RedHill Biopharma (Nasdaq: RDHL).

Notable IPOs Today: Mobilicom Ltd (Nasdaq: MOB), Pagaya Technologies Ltd. Class A Ordinary Shares (Nasdaq: PGY), Inter & Co. Inc. Class A Common Shares (Nasdaq: INTR), bioAffinity Technologies, Inc. Common Stock (Nasdaq: BIAF), Chenghe Acquisition Co. Class A Ordinary Share (Nasdaq: CHEA).

Notable Equity Crowdfunding Campaigns Ending Today: Brand3D (StartEngine), Gypsee Travel (PicMii).

Notable Economic Events Today: Jobless Claims (8:30 a.m. ET), Current account deficit (8:30 a.m. ET), Manufacturing PMI (9:45 a.m. ET), Markit Composite PMI (9:45 a.m. ET), Services PMI (9:45 a.m. ET), Crude Oil Inventories (11:00 a.m. ET).

Steelcase Grows Despite Inflation

Photo by Laura Davidson / Unsplash

Shares of Steelcase (NYSE: SCS) jumped 3.06% in after-hours trading on Wednesday after the office furniture company posted positive financial earnings.

Financials: Steelcase reported a loss of 5 cents per share and revenue of $740.7 million; both were better than expected.

The Good: Revenue grew 33% in the quarter due to stronger incoming orders and growth in the Americas.

The Bad: Inflationary pressures grew in the quarter. A gross margin of 25.9% represents a year-over-year decline.

Final Thoughts: Steelcase’s stock has dropped nearly 12% this year, which is better than most stocks.

Behind Bitcoin’s Recent Decline

Similar to other cryptocurrencies, the recent decline in the price of Bitcoin can be attributed to two factors.

Economics: High inflation, as indicated by the recent Consumer Price Index (CPI), has scared all markets, including Bitcoin.

Halted: Some crypto lending platforms, most notably Celsius, have either temporarily halted transactions or have stopped them with no end in sight.

Final Thoughts: If inflation persists and more crypto platforms prevent transactions, then the price of Bitcoin could be in more trouble.

Trends to Watch

Looking for New Users: Binance.US Launches Zero-Fee Bitcoin Trading (CoinDesk)

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