S&P Global Ratings raised its corporate credit rating on KB Home and its issue-level ratings on the company's senior unsecured notes to B+ from B.
The outlook is positive, reflecting S&P's view that KB Home will likely continue to achieve higher-than-market growth in home sales and EBITDA margins at levels that might prompt additional positive ratings actions over the next 12 months.
The ratings upgrade, on the other hand, is driven by the first-half 2017 growth in the company's robust sales and EBITDA, which surpassed S&P's forecast for KB Home.
According to a note, the rating agency expects the company to achieve 10% to 11% growth in home deliveries and an average closing price between $390,000 and $400,000 by 2017-end, which would be further supplemented by sustained strong absorption, particularly for its California portfolio.
S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.