KB Home Not Out of the Woods

KB Home(KBH Quote) jumped 3% Tuesday after the company reported a quarter that was filled with red ink but largely in line with expectations. So is now the time to get bullish on the homebuilder?

Not so fast.

The outlook is still murky about how long the U.S. housing market must still fall before hitting a bottom. To be clear, no homebuilder has said that a definitive bottom has yet been reached.

"We believe it will take time for individual housing markets to work through excess supply and that conditions will not improve until late-2007 or 2008 at the earliest," KB Home said in its annual report filed on Tuesday.

KB Home reported a loss of $49.6 million, or 64 cents a share, for the fourth quarter, reversing a year-earlier profit of $304.4 million, or $3.44 a share.

The results were hampered by $343.3 million of writedowns and write-offs associated with high-priced land purchased in recent years that is no longer profitable amid the housing downturn.

Revenue rose 13% to $3.55 billion. Some interpreted the revenue boost as a sign that things are getting better in housing.

For instance, Jim Cramer wrote on his RealMoney.com blog: "How in heck did KB Home have up revenue? How can it not be drowned in red ink and sales shortfalls? I think it's because the housing business is better, as an industry, than we perceive it. Maybe that's why, at a certain point, they got that premium multiple."