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KB Home (KBH) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research

KB Home (KBH) closed the most recent trading day at $34.57, moving +0.61% from the previous trading session. The stock outpaced the S&P 500's daily gain of 0.08%. Elsewhere, the Dow lost 0.01%, while the tech-heavy Nasdaq lost 0.04%.

Prior to today's trading, shares of the homebuilder had lost 3.73% over the past month. This has lagged the Construction sector's gain of 5.38% and the S&P 500's gain of 4.35% in that time.

Wall Street will be looking for positivity from KBH as it approaches its next earnings report date. In that report, analysts expect KBH to post earnings of $1.31 per share. This would mark year-over-year growth of 36.46%. Our most recent consensus estimate is calling for quarterly revenue of $1.60 billion, up 18.54% from the year-ago period.

KBH's full-year Zacks Consensus Estimates are calling for earnings of $2.86 per share and revenue of $4.59 billion. These results would represent year-over-year changes of +67.25% and +0.92%, respectively.

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. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Within the past 30 days, our consensus EPS projection has moved 0.14% higher. KBH is holding a Zacks Rank of #1 (Strong Buy) right now.

Digging into valuation, KBH currently has a Forward P/E ratio of 12.03. This valuation marks a premium compared to its industry's average Forward P/E of 10.81.

Investors should also note that KBH has a PEG ratio of 1.29 right now. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. Building Products - Home Builders stocks are, on average, holding a PEG ratio of 1.17 based on yesterday's closing prices.

The Building Products - Home Builders industry is part of the Construction sector. This group has a Zacks Industry Rank of 13, putting it in the top 6% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our 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.

You can find more information on all of these metrics, and much more, on Zacks.com.


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