KB Home (KBH) Suffers a Larger Drop Than the General Market: Key Insights

In the latest close session, KB Home (KBH) was down 2.84% at $53.30. The stock's change was less than the S&P 500's daily loss of 0.33%. Elsewhere, the Dow lost 0.7%, while the tech-heavy Nasdaq lost 0.12%.

Coming into today, shares of the homebuilder had lost 0.2% in the past month. In that same time, the Construction sector lost 4.75%, while the S&P 500 gained 3.87%.

Analysts and investors alike will be keeping a close eye on the performance of KB Home in its upcoming earnings disclosure. The company's upcoming EPS is projected at $0.88, signifying a 45.34% drop compared to the same quarter of the previous year. Meanwhile, the latest consensus estimate predicts the revenue to be $1.29 billion, indicating a 20.14% decrease compared to the same quarter of the previous year.

Looking at the full year, the Zacks Consensus Estimates suggest analysts are expecting earnings of $3.3 per share and revenue of $5.09 billion. These totals would mark changes of -49.39% and -18.37%, respectively, from last year.

Investors should also pay attention to any latest changes in analyst estimates for KB Home. Recent revisions tend to reflect the latest near-term business trends. Hence, positive alterations in estimates signify analyst optimism regarding the 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, stretching from #1 (Strong Buy) to #5 (Strong Sell), has a noteworthy track record of outperforming, validated by third-party audits, with stocks rated #1 producing an average annual return of +25% since the year 1988. Over the last 30 days, the Zacks Consensus EPS estimate has remained unchanged. KB Home is currently sporting a Zacks Rank of #3 (Hold).

In terms of valuation, KB Home is currently trading at a Forward P/E ratio of 16.65. Its industry sports an average Forward P/E of 14.35, so one might conclude that KB Home is trading at a premium comparatively.

Also, we should mention that KBH has a PEG ratio of 9.1. The PEG ratio bears resemblance to the frequently used P/E ratio, but this parameter also includes the company's expected earnings growth trajectory. As the market closed yesterday, the Building Products - Home Builders industry was having an average PEG ratio of 2.9.

The Building Products - Home Builders industry is part of the Construction sector. This industry currently has a Zacks Industry Rank of 92, which puts it in the top 38% of all 250+ industries.

The strength of our individual industry groups is measured by the Zacks Industry Rank, which is calculated based on the average Zacks Rank of the individual stocks within these groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow KBH in the coming trading sessions, be sure to utilize Zacks.com.

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This article originally published on Zacks Investment Research (zacks.com).

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