Earnings Today Expected more growth at pre-market. Lets see what we get after the report. Will be very interesting.
KBH trade ideas
MACD looks to be closing red. Opened up my position today heading into earnings. KBH looks to benefit with the housing situation. Expecting some good news tomorrow.
KB HOME AnnouncementHello traders, KB HOME is in a fake bearish configuration with a large selling volume especially in the last quarter of an hour of the session. On the TIMEFRAME 1 Min we see a rejection of buyers on a purchase volume, it is going to its next low point. Then start again in its rise, big potential to break the zone of equilibrium, to reach another zone. And go to its next higher, after seeing if the buyers are still in the game to go to the point above.
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OPENING: KBH JULY 17TH 28/40 SHORT STRANGLE... for a 1.17 credit.
Notes: Earnings in 1 with rank/implied at 57/73 and the at the money short straddle paying nearly 15% of the share price. Looking to take profit at 50% max or otherwise manage on side approaching worthless.
THE WEEK AHEAD: KBH, NKE EARNINGS; IWM, IYREARNINGS:
KBH (64/77/15.5%) announces on Wednesday after the close. Pictured here is a Plain Jane, directionally neutral short strangle camped out at the 18 delta strikes paying 1.34 as of Friday close. Look to put on a play on Wednesday before the close, adjusting strikes as necessary to accommodate movement of the underlying between here and then.
NKW (40/45/9.1%) also announces this week (Thursday after the close), but has less than ideal metrics. Naturally, those could change during the week, so it's worth keeping an eye on.
EXCHANGE-TRADED FUNDS SCREENED FOR 30-DAY >35%:
SLV (51/39)
EWW (47/43)
TQQQ (45/92)
GDXJ (44/61)
XLE (42/55)
EWZ (42/37)
GDX (38/47)
SMH (35/40)
XOP (31/68)
USO (12/60)
I generally look for rank >50, 30-day >35% with these; only SLV meets this criteria, but the August 21st 15/19 short strangle paying .61 doesn't exactly get my motor running.
BROAD MARKET:
IWM (61/46)
SPY (38/32)
QQQ (35/31)
EFA (34/28)
Small caps are where the volatility is at. The August 21st 115/161 delta-neutral 16 delta short strangle is paying 4.34 to put on.
DIVVY-PAYING EXCHANGE-TRADED FUNDS ORDERED BY RANK:
IYR (52/40)
XLU (46/32)
HYG (40/22)
EWZ (40/57)
SPY (38/32)
EWA (38/38)
EFA (34/28)
TLT (20/17)
EMB (19/17)
Will look to ladder out in IYR in August, September for the IRA if the implied hangs in there. The 16 delta August 21st 67 short put is paying 1.39; the September 65, 1.61.
$KB Home break up or down?Earnings Highlights Source Seeking Alpha
KB Home (NYSE:KBH) drops 2.9% in after-hours trading after the homebuilder's fiscal Q4 revenue of $1.56B trailed the consensus estimate of $1.60B.
Average selling price of $392.5K for the quarter ended Nov. 30, 2019 slipped from $395.2K in the year-ago quarter.
Q4 EPS of $1.31 exceeded the average analyst estimate of $1.30 and increased from 96 cents in the year ago quarter.
Q4 net orders rose 38% to 2,777, with net order value increasing 43% to $1.06B.
Ending backlog rose 24% to 5,078 home, with ending backlog value up 26% to $1.81B.
KBH Possible Bull PenantSymmetrical Triangle at the top of an up Trend. Breakout on above average volume. Higher Time Frame Trending up.
entry at the Gold Shadow line. Stop loss at the red line. Top of the Red Vertical Line is the my target area.
$KBH:NYSE - KB HOMES - Homebuilder up 70% YTDHomebuilders in the US have been having a great run year-to-date and with low interest rates likely to continue for a while then this could be a good stock to watch.
KB HOME is a homebuilding company. The Company is engaged in selling and building a range of new homes designed primarily for first-time, move-up and active adult homebuyers, including attached and detached single-family residential homes. It operates through five segments, which consist of four homebuilding segments and one financial services segment. Its homebuilding segments include West Coast, Southwest, Central and Southeast. The homebuilding segments are engaged in the acquisition and development of land primarily for residential purposes. The financial services segment offers property and casualty insurance and, in certain instances, earthquake, flood and personal property insurance to its homebuyers in the same markets as its homebuilding segments, and provides title services in the majority of markets located within its Central and Southeast homebuilding segments. It offers homes in development communities, at urban in-fill locations and as part of mixed-use projects.
KB Home aims for ATHKB Home engages in selling and building a variety of new homes. It builds various types of homes, including attached and detached single-family homes, townhomes and condominiums. It operates through the following segments: West Coast, Southwest, Central and Southeast. It offer homes in development communities, at urban in-fill locations and as part of mixed-use projects. The company was founded in 1957 and is headquartered in Los Angeles, CA.
Lennar Corp has set the scene for KB HOME earnings call.As earnings approach for KB Home tomorrow, sentiment and optimism is very low as a result of the earnings call from Lennar this mornings. Despite LEN beating on earnings things turned nasty on the earnings call and the stock has now reversed by 10% since the pre market.
LEN pointed out some major headwinds which freaked out investors, included were skilled labour shortage and costs, raw material costs as a result of the trade war and the fact that consumers are moving towards lower cost homes thus cutting the margins. Indecision regarding rate levels has also resulted in consumers waiting to see if better value credit will be available later in the year, thus housing starts have fallen. Putting all those factors together it is difficult to see how KBH could do anything but fall further in price.
$KBH KB HOMES has easy 20% upside on rate easing. Quite simply we all need somewhere to live and the easing of rte hikes by the FED has made that it a a little easier to own your own home. Indeed a rate reduction is more likely than a hike in 2019 which is a catalysts to the housing market.
KB Home: Yet Another Post-Earnings Fade for A Home Builder“KB Home shares jump on third quarter earnings” – such is the kind of quick trigger post earnings headline that consistently fails for home builders. KB Home (KBH) opened higher by 5.7% but was all downhill from there. At the close, KBH lost 3.1% on the day in a major reversal. This close was a vast improvement on a loss which reached 6.4% at the intraday low. Bottom-fishers were not able to push the stock back over its declining 50-day moving average (DMA).
In her reporting, Diana Olick, CNBC’s housing market reporter, pointed to a red flag in a 26% cancellation rare; most home builders are “in the teens.” KBH did not address this high cancellation rate and analysts did not ask about it either (Seeking Alpha Transcript). However, this rate was only up by one percentage point year-over-year; KBH simply tends to have a high cancellation rate.
As usual, KBH reported generally strong results. From the earnings slide presentation and the earnings release (percentage changes on a year-over-year basis):
Housing Revenues: +7%
Net income: +74%
Earnings per diluted share: +71%
Operating income: +38%
Adjusted housing gross profit margin: +140 basis points
Deliveries: +8%
Average Selling Price: -1%
Net Order Value: -5%
Net Orders: +3%
Backlog Value: -4%
Ending Community Count: -3%
Average Community Count: -7%
Absorption (net orders per community, per month): 11%
During the conference call, KBH summarized its guidance in strong terms:
“…a solid outlook for the fourth quarter, we expect a meaningful improvement in our book value by the end of this year. We are poised to finish 2018 with growth in revenues and a significantly higher year-over-year operating margin fueled primarily by the expansion of our gross margin, a key goal for us. As we look ahead to 2019, the combination of community count growth beginning in the fourth quarter of this year, a substantial increase in communities slated to open in 2019, and maintaining our solid absorption pace gives us confidence in achieving our targets next year.”
Still, investors likely found reasons to nitpick and sell in the details. KBH lowered metrics on average selling price and revenue (emphasis mine):
“Our $2 billion backlog provides visibility on deliveries for the remainder of this year, supporting our 2018 expectations including housing revenues that are at the low end of our previous guidance range. Although we are pleased with our year-over-year absorption pace increase in the third quarter, we now recognize in retrospect that our full year revenue guidance from last quarter was too aggressive based on the timing of getting our communities open and establishing our targeted pace to support projected fourth-quarter deliveries.
In addition, with our backlog currently weighted outside of California, we’re lowering our ASP expectations from our previous guidance, reflecting our third quarter backlog ASP that is down 4% year-over-year, which will also impact our revenues. Managing the business for the balance of 2018, we made the decision to maintain our pace price discipline and achieve a higher gross margin for this year as opposed to running our communities at a faster pace to preserve delivery volumes.
As a result, we’re now expecting a gross margin of approximately 18% for this year at the high end of our previous guidance range.”
Net-net, it was yet another fade for post-earnings action for a major home builder. The impact rippled throughout the sector. Toll Brothers (TOL) finished reversing all its post-earnings gains with a 2.5% loss on the day. Lennar (LEN) lost 2.0% with a 19-month closing low. The iShares US Home Construction ETF (ITB) lost 1.4% to close exactly at a 52-week low.
This month’s round of housing data have not improved the outlook for the housing market. I will cover this and more in my next Housing Market Review. It looks like time is running out on a good start for the seasonally strong period for home builders!
Be careful out there!
Full disclosure: long ITB call options
Is the outlook great for KB Home (KBH)?KB Home (KBH) shares are trading at $25.63. The company is announcing its quarterly earnings results on Tuesday after the market opens. What's driving KBH stock price? What's KBH stock price forecast?
KB Home which is in one of the largest homebuilders in the U.S. has delivered more than 600,000 homes--and it operates in seven states. The stock has yielded a negative return of -21% in 2018...
www.finstead.com
Sell KBHSell Short to fill the gap
Hourly
Stoch oversold @ 11:30 6/29/18 first trigger, waiting next for cofirmation
MACD convergence to mean
entry 27.42
s/l 27.72
t/p 26.05
t/p 25.41
r/r 2.43
r/r 3.69
Profit Trading
