KB Home, the Los Angeles-based homebuilder that targets first-time buyers, fell in New York trading after reporting a decline in quarterly profit and weaker gross margins.
Net income for the fourth quarter ended Nov. 30 dropped to $13.9 million, or 18 cents a share, compared with $17.4 million, or 23 cents, a year earlier, the company said in a statement today. The results included a $19.8 million gain related to the wind-down of a mortgage-banking joint venture and a $6.6 million gain from a loan guarantee.
"KB turned in very strong orders, ahead of our optimistic forecast, setting up the company for good growth in 2012," Stephen East and Truman Patterson, analysts with New York-based Ticonderoga Securities LLC, wrote in a note to clients today. "Unfortunately, the rest of the results were disappointing as one-time gains accounted for nearly double the reported income."
Gross margins fell short of the company's earlier forecast. The housing gross margin, excluding inventory-related charges, was 15% in the fourth quarter compared to 17% in the previous three months. KB Home said in September that margins would improve in the fourth quarter. Net orders rose 38% to 1,494.