KB Home Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions
The quarterly results for KB Home (NYSE:KBH) were released last week, making it a good time to revisit its performance. It looks like a credible result overall - although revenues of US$1.5b were in line with what the analysts predicted, KB Home surprised by delivering a statutory profit of US$1.76 per share, a notable 12% above expectations. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
View our latest analysis for KB Home
Taking into account the latest results, the most recent consensus for KB Home from ten analysts is for revenues of US$6.74b in 2024. If met, it would imply a reasonable 3.8% increase on its revenue over the past 12 months. Statutory per-share earnings are expected to be US$7.88, roughly flat on the last 12 months. Before this earnings report, the analysts had been forecasting revenues of US$6.62b and earnings per share (EPS) of US$7.52 in 2024. So the consensus seems to have become somewhat more optimistic on KB Home's earnings potential following these results.
There's been no major changes to the consensus price target of US$69.27, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on KB Home, with the most bullish analyst valuing it at US$87.00 and the most bearish at US$50.00 per share. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that KB Home's revenue growth is expected to slow, with the forecast 5.0% annualised growth rate until the end of 2024 being well below the historical 11% p.a. growth over the last five years. Compare this to the 93 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 5.5% per year. So it's pretty clear that, while KB Home's revenue growth is expected to slow, it's expected to grow roughly in line with the industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards KB Home following these results. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall industry. The consensus price target held steady at US$69.27, with the latest estimates not enough to have an impact on their price targets.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple KB Home analysts - going out to 2026, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 1 warning sign for KB Home that you should be aware of.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
