KB Home (KBH, Financial) (KBH - $40.72 – NYSE), one of the nation’s leading homebuilders saw its stock sell-o in the quarter asconcerns increased about the impact on demand from higher home prices and the impact of raw material and labor cost in ation on pro tability. e Company’s fundamentals tell a di erent story as KB Home reported a very strong quarter ( scal 2Q-2021) with revenue growth of 58% year-over-year, margin expansion, EPS growth that exceeded consensus estimates, net new orders up 145%, and ending backlog increasing 98%. Management commented that net new orders were the Company’s highest second-quarter level in 14 years. e medium-term outlook for home builders remains attractive supported by low mortgage rates, accelerating economic activity, and favorable demographic trends with Millennials/Gen Z entering the household formation phase. Additionally, KB Home’s valuation (P/E and EV/EBITDA) remains attractive trading towards the low-end of the historical valuation range.
From Keeley Asset Management Corp (Trades, Portfolio)'s Small Cap Dividend Value Fund second-quarter 2021 letter.
