Wouldn't bet a bundle when you read lower than the headlines - or believe those estimates will hold up - we'll see, but I see a huge amount of spin in all these reports:
"The Company generated 8,719 net orders during the quarter ended February 28, 2006, a decrease of 12% from the 9,901 net orders posted in the first quarter of 2005. Backlog units increased 14% on a year-over-year basis to 26,536 units at February 28, 2006. Backlog value rose to approximately $7.24 billion, up 25% from $5.80 billion a year ago with all regions generating year-over-year growth.
"After several years of exceptional growth and rapid price escalation in many housing markets, it is likely that we will see some markets pull back this year from their recent pace," said Karatz. "Our gross orders, which were only slightly below the year-earlier quarter, reflected steady demand. However, higher cancellation rates, which rose to more normalized levels, adversely impacted our net order comparison in the first quarter. Since we are just entering our prime selling season, it is still too early in the year to forecast the longer-term sales trend. Nevertheless, we remain cautiously optimistic due to the strength of the economies in our major markets, where historically healthy demand is expected to continue. As always, we remain focused on generating net orders to sustain our backlog and support future earnings growth."
"Nationally, it is clear that some housing markets have moderated from the over-heated and, in some cases, speculative pace of growth of the past few years," said Karatz. "In our view, this tempering of demand to more sustainable long-term levels is a healthy trend for our company and the industry. There are signs of cooling in the hottest markets on both coasts and a shift in investor activity from buying to selling, resulting in less demand and increased supply in certain markets. Once these factors work their way through current housing supplies, however, we expect the market to move to a new equilibrium which will provide a platform for continuing and sustainable growth by KB Home. With this outlook and our healthy first-quarter performance, we feel confident in maintaining our earnings estimate of $11.25 per diluted share for 2006." |
