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KB Home (KBH) Gains As Market Dips: What You Should Know

Zacks Equity Research

KB Home (KBH) closed at $34.65 in the latest trading session, marking a +1.05% move from the prior day. The stock outpaced the S&P 500's daily loss of 2.81%. Meanwhile, the Dow lost 2.94%, and the Nasdaq, a tech-heavy index, lost 3%.

Heading into today, shares of the homebuilder had lost 9.36% over the past month, lagging the Construction sector's loss of 5.57% and the S&P 500's loss of 3.97% in that time.

Investors will be hoping for strength from KBH as it approaches its next earnings release. In that report, analysts expect KBH to post earnings of $0.44 per share. This would mark year-over-year growth of 41.94%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $949.93 million, up 17.06% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $3.70 per share and revenue of $5.21 billion. These totals would mark changes of +29.82% and +14.35%, respectively, from last year.

It is also important to note the recent changes to analyst estimates for KBH. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.59% higher. KBH is holding a Zacks Rank of #1 (Strong Buy) right now.

Investors should also note KBH's current valuation metrics, including its Forward P/E ratio of 9.27. For comparison, its industry has an average Forward P/E of 9.78, which means KBH is trading at a discount to the group.

It is also worth noting that KBH currently has a PEG ratio of 0.85. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Building Products - Home Builders industry currently had an average PEG ratio of 0.96 as of yesterday's close.

The Building Products - Home Builders industry is part of the Construction sector. This industry currently has a Zacks Industry Rank of 17, which puts it in the top 7% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.

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