KB Home (KBH) recently unveiled Encore in Buffalo community in Las Vegas.
Built near Buffalo Drive, Encore features four one- and two-story floor plans that can accommodate up to six bedrooms and three and a half baths. Home buyers will have ample choices to convert a place into study, home office or media center. They can also choose from flooring, cabinetry, smart home technology and whole home audio systems. Price of these homes starts from $200,000s.
Like other KB Homes, Encore homes feature ENERGY STAR certified appliances and include energy- and water-efficient features like radiant barrier roofing, low-e windows, and smart USB outlets which lower utility bills.
The opening of new communities is in line with KB Home’s strategy to increase community count. Encore homes are one of the many KB Home communities in Las Vegas. However, fewer-than-expected home deliveries, higher construction cost and weaker margins have resulted in sluggish earnings in the past few quarters.
Meanwhile, KB Home stated during its fourth quarter 2014 earnings call that it expects these headwinds to persist, thereby resulting in gross margin lower than 20% in 2015. Gross margin is expected to hit a bottom in the first quarter of 2015, with sequential improvement through the rest of the three quarters of 2015.
KB Home carries a Zacks Rank #3 (Hold).
Stocks to Consider
Some better-ranked stocks in the broader building sector include TRI Pointe Homes, Inc. (TPH), Quanex Building Products Corporation (NX) and Graña y Montero SAA (GRAM). While TRI Pointe Homes and Graña y Montero sport a Zacks Rank #1 (Strong Buy), Quanex Building Products carries a Zacks Rank #2 (Buy).
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