A contractor works on a home under construction at KB Home's Vicino… (David Paul Morris, Bloomberg )
KB Home's stock fell the most in six months after the home builder reported order growth that analysts said was less than that of the company's competitors.
The stock fell $1.06, or 6.4%, to close at $15.60 on Thursday. During the day it fell as much as 7.3%, the biggest decline in intraday trading for the shares since June 11.
KB Home's "order trends were disappointing," Vincent Foley, a credit analyst with Barclays, said in a note to investors.
The Los Angeles builder said its net orders rose 4.2% in its fiscal fourth quarter ended Nov. 30 from a year earlier, to 1,557 homes. KB Home's orders per average community rose 11% in the 2012 fiscal year, less than the average of about 30% among other builders, according to Adam Rudiger, an analyst with Wells Fargo & Co.
"We believe the company will need to aggressively open communities early in 2013 in order to generate order growth in line with peers," Rudiger wrote in a note to investors. He has a market perform rating on KB Home, the equivalent of a hold.
The builder said it had 191 new-home communities open for sales at the end of the fourth quarter, down 18% from a year earlier. KB Home's revenue climbed 20% to $578.2 million. The company's contract backlog, an indication of future sales, rose 35% to $618.6 million.
KB Home had fourth-quarter net income of $7.7 million, or 10 cents a share, down from $13.9 million, or 18 cents, a year earlier. The average of 21 estimates in a Bloomberg survey was for earnings of 6 cents a share. In the year-earlier period, KB Home had gains of $19.8 million related to ending a mortgage-banking joint venture and $6.6 million from a loan guarantee.
Overall in the housing industry, low mortgage rates and a shrinking inventory of existing homes are giving home builders more customers. Confidence among U.S. builders climbed in December for the eighth straight month, reaching its highest level in more than six years, according to the National Assn. of Home Builders/Wells Fargo index of builder sentiment released this week.