UPDATE: KB Home Shares Tumble After Downbeat FQ3 Results

Shares of KB Home

fell around 5.7% in pre-market trading after the company reported weaker-than-expected fiscal third-quarter results. The Los Angeles, California-based company posted quarterly earnings of $28.4 million, or $0.28 per share, versus $27.3 million, or $0.30 per share, in the year-ago quarter. Its revenue climbed to $589.2 million from $549 million. However, analysts were expecting earnings of $0.40 per share on revenue of $646.76 million. Homebuilding operating income fell to $33.9 million from $36.0 million. However, its financial services operations posted pretax income of $1.8 million versus $2.4 million in the year-ago period. KB Home delivered 1,793 homes in the quarter, versus 1,825 homes delivered in the year-ago period. The overall average selling price increased 9% to $327,000, versus $299,100. The housing gross profit margin widened to 18.8% from 18.2%, while selling, general and administrative expenses as a percentage of housing revenue widened to 12.4% from 11.6%. At August 31, 2014, cash, cash equivalents and restricted cash totaled $329.5 million, versus $528.7 million at May 31, 2014. Inventories rose to $3.24 billion at August 31, 2014, versus $2.30 billion at November 30, 2013. Jeffrey Mezger, president and chief executive officer said, “In a slowly recovering economic and housing market environment, we are consistently producing profitable results, growing our community count and generating our highest backlog value since 2008. We are clearly seeing the impact of strategies that we have implemented over the past few years.” KB Home shares dropped 5.72% to $16.00 in pre-market trading.