Housing Giant Struggles with West Coast Mix and Pricing Adjustments

  • KB Home shares fell after missing profit expectations for Q3
  • Lowered housing gross profit margin outlook to 21.2% from 21.5%
  • CEO Jeffrey Mezger attributed lower margins to West Coast mix and pricing adjustments
  • Revenue increased by 10% to $1.75 billion in Q3
  • Home orders remained flat at 3,085, but order value grew 2% and homes delivered rose 8%

KB Home shares fell after the company posted a third-quarter profit that missed analyst expectations and lowered its housing gross profit margin outlook. The homebuilder’s stock dropped 6.3% to $81.86 in after-hours trading Tuesday, following the announcement. Despite a 10% increase in revenue to $1.75 billion during Q3, CEO Jeffrey Mezger attributed lower margins to a shift in product and geographic mix, as well as pricing adjustments to support demand. The company now expects housing revenue between $6.85 billion and $6.95 billion for the year, up from a previous outlook of $6.7 billion to $6.9 billion.

Factuality Level: 10
Factuality Justification: The article provides accurate information about KB Home’s financial performance, including specific numbers and quotes from the CEO to explain the reasons behind the lower profit margin. It also includes relevant details about the company’s outlook for future revenue.
Noise Level: 3
Noise Justification: The article provides relevant information about KB Home’s financial performance and explains the reasons behind the lower profit margin. It also includes specific numbers and comparisons to previous periods. However, it lacks in-depth analysis or discussion of long-term trends or consequences for those affected by the company’s decisions.
Public Companies: KB Home (KBH)
Key People: Jeffrey Mezger (Chief Executive)

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Financial Relevance: Yes
Financial Markets Impacted: KB Home’s stock price
Financial Rating Justification: The article discusses the company’s financial performance, including missed earnings expectations and a lowered housing gross profit margin outlook, which led to a drop in its stock price.
Presence Of Extreme Event: No
Nature Of Extreme Event: No
Impact Rating Of The Extreme Event: No
Extreme Rating Justification: There is no extreme event mentioned in the text.
Move Size: The market move size mentioned in this article is a 6.3% decrease in the stock price of KB Home after-hours trading.
Sector: Housing
Direction: Down
Magnitude: Medium
Affected Instruments: Stocks

Reported publicly: www.marketwatch.com