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New Home Sales Tank – KBH Claims Its Numbers “Improved”
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Thread: New Home Sales Tank – KBH Claims Its Numbers “Improved”

  1. #1
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    Default New Home Sales Tank – KBH Claims Its Numbers “Improved”

    “We are confident we can produce further improvement in our results in the second half of this year” – KB Homes CEO in reference to its “returns-focused” growth model
    “Returns-Focused Growth Model.” Has a nice ring to it, doesn’t it? KBH’s revenues dropped 7.3% YoY for Q2. It’s operating income plunged a healthy 28%. How’s that growth strategy working out for you, Jay?

    Of course it produced a headline EPS “beat.” But this is because it implemented a full-blown deep-tissue body massage to GAAP accounting, including capitalizing costs that should have been expensed (interest expense and homebuilding expenses), it recognized a non-cash “income” in off-balance sheet JV’s (a suspiciously round $2.5 million) and slashed its arbitrarily determined book tax rate to 17% from 28%.

    Except in certain areas where markets remain hot due to migration patterns (hundreds moving to Denver weekly – please stop), the housing market is contracting despite the lowest mortgage rates since late 2017. The Government has all but made it possible for a barely breathing corpse to take down a tax-payer guaranteed mortgage (there’s even several no-down-payment programs).

    The homebuilder sentiment index (formally called the “Housing Market Index”) was released on Monday morning. It fell to an index level of 64 in June from 66 in May. Wall St’s finest were looking for a consensus 67. All three sub-indices declined: current sales conditions, buyer traffic and expectations for the next six months. Buyer traffic has been below 50 for two months in a row. This is despite more than a 1% decline in the average rate on a 30-year fixed rate mortgage during the last 7 months.


    http://news.goldseek.com/GoldSeek/1561650368.php
    Last edited by valerb; 28th June 2019 at 02:20.
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