Shares of KB Home KBH surged over 12.40% on Thursday to hit a new 52-week high after the company reported impressive fourth-quarter and full-year results on Wednesday. This climb is part of a strong run that might make investors take a look at why the home building power is currently a Zacks Rank #1 (Strong Buy).
KB Home reported Q4 earnings of $0.84 per share, which marked a 110% year-over-year jump and topped the Zacks Consensus Estimate. The company also saw its top line pop by nearly 18% to hit $1.4 billion (also read: KB Home (KBH) Stock Gains on Earnings & Revenue Beat in Q4).
Fourth quarter home deliveries jumped by 9% to 3,340 homes, with the average selling price hitting $416,500—an 8% climb from the year-ago period.
"As we look to 2018, we expect conditions will remain favorable in most of our served markets, with solid demand for housing driven by healthy employment, rising household incomes and strong consumer confidence, and continued limited supply," CEO Jeffrey Mezger said in a statement.
"Our main priorities for 2018 are to further accelerate our financial performance, grow our community count, and enhance long-term stockholder value."
Before today’s gains, KB Home had seen its stock price skyrocket nearly 107% over the last 52-weeks. But investors should note that the company’s current fundamentals could set the stock up for a continued climb as it heads into fiscal 2018.
The home construction giant, which has built homes since the late 1950s, specializes in modern energy-efficient attached and single-family homes. KB Home is currently a Zacks Rank #1 (Strong Buy) and sports an overall “A” VGM grade.
KB Home currently rocks a “B” grade for Value in our Style Scores system. This is supported by the company’s solid 0.68 P/S ratio, which marks a discount compared to the “Building Products – Home Builders” industry average. On top of that, the home builder’s P/B ratio of 1.60 compares favorably to the industry’s 1.56 average. The Los Angeles-based company is currently trading at a very respectable 14.56x earnings.
At the moment, the company also sports a “B” grade for Growth in our Style Scores system. In terms of growth metrics, KB Home has been able to expand its cash position at a rate above its industry’s average. The firm’s current cash flow growth rate is 23.78%.
Looking forward, KB Home is projected to see its first quarter 2018 earnings skyrocket 100%, based on our current Zacks Consensus Estimates. The company’s Q2 EPS is expected to reach $0.51, which would mark a 54.55% year-over-year jump.
Our current Zacks Consensus Estimates are also calling for KB Home’s sales to hit $896.29 million in Q1. This would represent a 9.49% climb from the year-ago period. For full-year fiscal 2018, KB Home revenues are projected pop by over 8% to reach $4.72 billion.
Within the last 60 days, KB Home earned two upward earnings estimate revisions for Q1. During this same time frame, the company has received three positive revisions for the following quarter, as well as four for the full year—both against zero downgrades.
Investors should note that upward earnings estimate revisions play a large role in our proven Zacks Rank system. Furthermore, KB Home has topped or matched earnings estimates in 10 of the last 11 quarters, including the trailing seven periods.
Looking even farther down the road, KB Home is expected to improve its earnings at an annualized rate of 24.16% over the next three to five years.
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