The idea of a house fire leaves most any homeowner with cold chills. The idea of losing your home, and everything contained therein—including the most irreplaceable of heirlooms—is a nightmare. But home builder KB Home (KBH) may have a solution: a “fire-resilient” community unveiled in Southern California. Investors proved skeptical, but sent shares up fractionally in Thursday afternoon’s trading.
The Escondido development, which does not seem to itself have a name, is a “wildfire-resilient” community. That means that it is protected against three key sources of wildfire spreading: actual flame, flying ember, and radiant heat. The 64 homes in the development have all passed muster by the Insurance Institute for Business and Home Safety (IBHS), and contain a series of interesting twists that make the homes look attractive and prove surprisingly resistant to fire.
The homes have covered gutters—no risks of leaves or other potentially dry brush piling up therein—as well as siding made from either fiber cement or stucco, which of course, does not burn. The windows are tempered glass, reports note, and only low-combustible vegetation is used. It is also kept at least five feet away from the house itself, meaning there is less fuel on hand to catch. With no fuel in the immediate vicinity, fire simply has a much harder time actually reaching the house to begin with.
Didn’t Need so Many Houses Anyway….
This news comes at an odd time for KB Home, as it recently rolled out its earnings reports, along with projections on its future to come. And that future is, oddly, less homes. After posting first quarter sales that proved a letdown for investors, the future going forward did not look much better.
Normally, when spring rolls around, there is a bit of an uptick in home building. The ground thaws, and people can reasonably work outside again, so there is some more building going on. But—and particularly in some markets more than others—that uptick simply has not arrived. So with fewer homes being built, there will be fewer homes sold, particularly for home builders like KB Home.
Is KB Home a Buy or Sell?
Turning to Wall Street, analysts have a Hold consensus rating on KBH stock based on four Buys, eight Holds and two Sells assigned in the past three months, as indicated by the graphic below. After a 15.19% loss in its share price over the past year, the average IPG price target of $68.92 per share implies 16.34% upside potential.
