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KB Home (KBH) Gains But Lags Market: What You Should Know

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KB Home (KBH - Free Report) closed at $40.51 in the latest trading session, marking a +0.32% move from the prior day. This change lagged the S&P 500's 2.38% gain on the day. At the same time, the Dow added 1.95%, and the tech-heavy Nasdaq gained 3.01%.

Prior to today's trading, shares of the homebuilder had lost 4.36% over the past month. This has lagged the Construction sector's gain of 0.89% and the S&P 500's loss of 0.91% in that time.

KBH will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $0.87, up 38.1% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $1.21 billion, up 12.47% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $5.11 per share and revenue of $5.91 billion. These totals would mark changes of +63.26% and +41.18%, respectively, from last year.

Investors should also note any recent changes to analyst estimates for KBH. These revisions help to show the ever-changing nature of 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. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate remained stagnant. KBH currently has a Zacks Rank of #2 (Buy).

Looking at its valuation, KBH is holding a Forward P/E ratio of 7.9. This valuation marks a discount compared to its industry's average Forward P/E of 8.03.

Also, we should mention that KBH has a PEG ratio of 0.37. 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 0.71 as of yesterday's close.

The Building Products - Home Builders industry is part of the Construction sector. This group has a Zacks Industry Rank of 41, putting it in the top 17% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

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