Moody's alters KB Home view to positive

Moody's Investors Service said it changed KB Home’s outlook to positive from stable. Simultaneously, Moody's affirmed the company's Ba3 corporate family rating, Ba3-PD probability of default rating and Ba3 ratings on its senior unsecured notes. The company's SGL-2 speculative grade liquidity rating is maintained.

"The positive outlook reflects Moody's expectation that KB Home will see robust revenue expansion toward $5.5 billion in FY 2021 through its strong order trends, significant backlog position of nearly $3 billion at November 2020, and the visibility provided by the company's build-to-order business model," said Natalia Gluschuk, a Moody's vice president and senior analyst, in a press release.

Moody's also expects KB Home to continue deleveraging and improving gross margin, and its interest coverage to rise above 5x by year-end. Further, Moody said it expects the company to continue maintaining a conservative financial strategy focusing on balance sheet strength and good liquidity and successfully address its upcoming debt maturities over the next 18 months. Strong tailwinds in the homebuilding sector over the next 12 to 18 months will support KB Home's growth and credit metric strengthening.

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