June 29, 2012
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of KB Home (NYSE: KBH ) rose 12% after reporting second-quarter earnings that showed an improvement in housing.
So what: Revenue rose 11% in the second quarter to $302.9 million, and three out of four regions showed growth. But the company did report a loss of $0.31 per share, which was an improvement from last year but still a loss.
Now what: Traders are hot and bothered about the about the improvement but let's keep in mind that KB Home is still losing $0.08 for every dollar it has in sales. That's not exactly the sign of a good business, and despite management's expectation that the company will return to profitability in the second half of the year I'm still not buying today. The housing market still has issues ahead of it; I don't like buying into a company losing money in an overall weak part of the economy.
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