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Unformatted text preview: North America United States Industrials Building & Building Products 23 December 2011 KB Home Reuters: KBH.N Bloomberg: KBH UN Exchange: NYS Ticker: KBH F4Q11 Results Review Nishu Sood, CFA Research Analyst (+1) 212 250-4756 [email protected] Strong order growth the only outperformance in F4Q11 results KB's results outperformed in EPS ($0.18 vs. our $0.07/Street $0.04) and order growth (+38% vs. Street +29%); however, EPS benefited from a $0.26 one-time gain leaving orders as the only area of outperformance. Lower operating margins were the main drag on EPS. Most importantly, cash levels came in slightly below guidance. The risks of ongoing cash concerns are that the company begins to make sub-optimal decisions at the ground level as it prioritizes near-term cash generation over what might be economically best in the long-term; maintain Hold. Forecasts and ratios Year End Nov 30 2011A 2012E 2013E 1Q EPS -1.49 – – 2Q EPS -0.89 – – 3Q EPS -0.13 – – 4Q EPS 0.18 – – FY EPS (USD) -2.32-0.09 1.34 Source: Deutsche Bank estimates, company data Deutsche Bank Securities Inc. All prices are those current at the end of the previous trading session unless otherwise indicated. Prices are sourced from local exchanges via Reuters, Bloomberg and other vendors. Data is sourced from Deutsche Bank and subject companies. Deutsche Bank does and seeks to do business with companies covered in its research reports. Thus, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. DISCLOSURES AND ANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1. MICA(P) 146/04/2011. Forecast Change Hold Price at 22 Dec 2011 (USD) 6.89 Price Target 9.00 52-week range 16 - 5 Key changes EPS (USD) 0.19 to -0.09 È-149.4% Revenue(USDm) 1,549 to 1,684 Ç 8.7% Price/price relative 4 8 12 16 20 24 12/08 6/09 12/09 6/10 12/10 6/11 KB Home S&P 500 INDEX (Rebased) Performance (%) 1m 3m 12m Absolute-2.7 20.5-51.5 S&P 500 INDEX 5.6 11.0-0.4 Stock & option liquidity data Market Cap (USD) 531.6 Shares outstanding (m) 77.2 Free float (%) 100 Volume (22 Dec 2011) 2,032,852 Option volume (und. shrs., 1M avg.) 363,917 Implied & Realized Volatility (3M) 0% 50% 100% 150% Dec 08 Jun 09 Dec 09 Jun 10 Dec 10 Jun 11 Realized Vol Implied Vol (ATM) Company Global Markets Research Upside in EPS driven by one-time gains EPS came in at $0.18/sh, which was above our $0.07 and the Street at $0.04. The beat in EPS is mostly related to a $19.8 mm gain (~$0.26/sh) as a result of unwinding its mortgage banking JV. The company's gross margins came in at 15.1%, below previous guidance (+200 bps on a quarter/quarter basis) and less than our 18% and the Street at 17.5%. Overall, operating margins did not move back into positive territory as most expected. Operating margins at -3.3% came in below our +1.3% as the company reported a shortfall in sg&a (as well as gross below our +1....
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This note was uploaded on 02/05/2012 for the course FINANCE 101 taught by Professor George during the Spring '11 term at University of Phoenix.
- Spring '11