LOS ANGELES (TheStreet) -- KB Home (KBH) shares jumped in morning trading Friday after the homebuilder drastically narrowed its quarterly losses, beating expectations, helped by fewer charges and higher revenue.
KB Home posted quarterly losses of $1.4 million, or 2 cents loss per share, compared with year-earlier losses of $66.1 million, or 87 cents loss per share. Analysts expected the builder to lose $12.8 million, or 15 cents per share.
Revenue jumped 9.3% to $501 million. It was the first time in 4 years that KB Home booked revenue growth.
Inventory impairments and land option contract abandonment charges totaled $3.3 million, sharply lower than year-earlier charges of $47.7 million.KB Home improved its gross margins and moved from being an industry laggard to in-line with its homebuilder peers, noted Stifel Nicholas analyst Michael Widner. Another key positive in the report was word that KB Home's average sales price rose to $214,200, up 5.6% from year-earlier results, the analyst said, though he pointed out that the gain was mostly a function of heavily concentrated price gains in California. The average price of a KB Home house sold on the West Coast jumped 14.9% to $353,200. Widner did add the KB Home's report included some negative aspects, namely a 39% drop in year-over-year order volume, significantly below his expectations. He also cautioned that low third-quarter orders and a smaller backlog had "set up the next two quarters as likely tougher than previously expected for EPS." Earlier Friday morning the Commerce Department reported that sales of newly-built homes were flat in August at a seasonally adjusted annual rate of 288,000, flat from July's upwardly revised data. July's results were originally reported at a sales pace of 276,000, the worst on record until Friday's adjustment to 288,000. May's new-home sales pace of 282,000 was the slowest pace on record.
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