KB Home (KBH) Registers a Bigger Fall Than the Market: Important Facts to Note

In the latest trading session, KB Home (KBH) closed at $70.10, marking a -0.06% move from the previous day. The stock's change was less than the S&P 500's daily loss of 0.02%. At the same time, the Dow lost 0.21%, and the tech-heavy Nasdaq gained 0.29%.

Shares of the homebuilder witnessed a gain of 9.42% over the previous month, beating the performance of the Construction sector with its gain of 2.76% and the S&P 500's gain of 1.29%.

Investors will be eagerly watching for the performance of KB Home in its upcoming earnings disclosure. In that report, analysts expect KB Home to post earnings of $1.79 per share. This would mark a year-over-year decline of 7.73%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $1.64 billion, down 7.1% from the year-ago period.

For the entire fiscal year, the Zacks Consensus Estimates are projecting earnings of $8.01 per share and a revenue of $6.77 billion, representing changes of +13.94% and +5.55%, respectively, from the prior year.

Any recent changes to analyst estimates for KB Home should also be noted by investors. These recent revisions tend to reflect the evolving nature of short-term business trends. Therefore, positive revisions in estimates convey analysts' confidence in the company's business performance and profit potential.

Our research suggests that these changes in estimates have a direct relationship with upcoming stock price performance. 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.

The Zacks Rank system, ranging from #1 (Strong Buy) to #5 (Strong Sell), possesses a remarkable history of outdoing, externally audited, with #1 stocks returning an average annual gain of +25% since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. KB Home presently features a Zacks Rank of #2 (Buy).

Valuation is also important, so investors should note that KB Home has a Forward P/E ratio of 8.76 right now. For comparison, its industry has an average Forward P/E of 9.2, which means KB Home is trading at a discount to the group.

One should further note that KBH currently holds a PEG ratio of 0.79. Comparable to the widely accepted P/E ratio, the PEG ratio also accounts for the company's projected earnings growth. The Building Products - Home Builders was holding an average PEG ratio of 0.77 at yesterday's closing price.

The Building Products - Home Builders industry is part of the Construction sector. With its current Zacks Industry Rank of 26, this industry ranks in the top 11% of all industries, numbering over 250.

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

Remember to apply Zacks.com to follow these and more stock-moving metrics during the upcoming trading sessions.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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