Analysis of KB Homes

KB Home specializes in building and financing homes for first-time homebuyers. These entry-level homes offer low price points relative to the geographic region as a whole, and the company also offers various services (including mortgage banking) to homeowners with 3700 employees. The company is based in Los Angeles and focuses most of its efforts on marketing in the West and Southwest, including California, Nevada, Arizona, New Mexico, Colorado, Texas and Florida. The company has also expanded its operations to France, where it follows the same strategy (targeting firsttime home buyers) as in the United States through a whollyowned subsidiary.

The company's growth was strong during the latter part

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to continue this growth. KB Home has increased its indebtedness in recent years, with most of the increase occurring in its long-term debt structure. The company had long-term debt of $1.1 billion at the end of 1999; this increased to more than $1.6 billion at the end of 2001. By February 2002, that figure fell to $1.5 billion. Short-term debt increased from $338 million to $423 million during the same period ("Stock Reports"). Debt can be associated with a number of different activities within the KB Home organization, but is often associated with land purchases required for new development. Land can be purchased years before any construction takes place, resulting in the long-term debt seen here. The company has recently undertaken stringent land evaluation processes that should help control long-term debt. Competitive Positioning KB Home competes in the construction services industry of the capital goods sector. While this industry includes companies such as Centex and Pulte (also homebuilders), it also includes companies such as Fluor, which engages in construction services around the world, but not in homebuilding. For the purposes of this analysis, KB Home is compared against companies in the industry that are eng
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Approximate Pages = 9 (250 words per page)

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