KB Home (KBH) Only Profitable Thanks to Accounting Rule

Before celebrating the apparent earnings victory from KB Home (KBH) last quarter, investors may want to look at the details of the income statement and compare it to prior income statements.

Most investors understand that KB Home didn't actually 'earn' a $100 million profit - a loss of $91 million was offset by an accounting (tax) gain of $191 million in the company's fiscal fourth quarter.

What investors may not realize is that had it not been for the tax break, KB Home would have actually posted its biggest loss in the last four quarters. And things are supposed to be better?

The bigger problem remains.... too much homebuilder supply, and not enough homebuilding demand. Equilibrium is still years off.