Kaufman’s Shares Soar 16% on Earnings News
Shares of the nation’s home builders, including Los Angeles-based Kaufman & Broad Home Corp., jumped Tuesday after Kaufman reported better-than-expected quarterly earnings amid surging demand for new housing.
Kaufman’s stock soared nearly 16% after it reported second-quarter net income of $17.2 million, or 42 cents a share--up more than 60% over the same three-month period last year. The jump in net income reflects higher sales, higher prices and a new corporate strategy that has fattened operating profit.
Another major home builder, Miami-based Lennar Corp., also reported strong second-quarter results Tuesday. Lennar, which has a major presence in Southern California, said its quarterly profit increased 59% to $25.6 million, or 47 cents a share, and that revenue rose 35% to $532.1 million.
Kaufman’s quarterly results attracted the attention of investors, who bid up the shares of home builders across the board. Kaufman shares jumped $4.44 to close at $31.63 in New York Stock Exchange trading.
Meanwhile, Dallas-based Centex Corp. jumped $2.25 to $39.38; Lennar rose $1.75 to $30.38 ahead of its earnings report; and Pulte Corp. of Bloomfield Hills, Mich., rose $1.44 to $29.94, all on the NYSE.
Low mortgage rates, high consumer confidence and robust employment are keeping the market humming, analysts say.
Sales have been so heavy in California that Kaufman & Broad has run out of homes to sell in many developments, despite price hikes. “We are running out of homes faster than we thought we would,” said Michael Henn, senior vice president.
Kaufman’s second-quarter revenue rose 30%, to $537.5 million from $415 million. During the quarter, the company completed the sale of 3,409 homes, up 38% from a year earlier. The average sales price of the homes it sold in California rose 4% to $215,800, while increasing 1.9% to $120,000 in the rest of its regions.
A Standard & Poor’s index of builders’ stocks surged 8.9% on Tuesday. That was its biggest percentage gain since May 1995.
The rise came as Goldman, Sachs & Co. raised its ratings on several stocks, including Centex, Kaufman & Broad, Pulte and Columbia, Md.-based Ryland, to “trading buy,” citing better-than-expected earnings and low stock valuations. Goldman analyst Stephen Dobi said he expects long-term interest rates, and the home mortgage rates that shadow them, to remain low because of Asia’s weak economies.
