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KB Home (KBH) Stock Sinks As Market Gains: Here's Why

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KB Home (KBH - Free Report) ended the recent trading session at $48.93, demonstrating a -3.41% change from the preceding day's closing price. This move lagged the S&P 500's daily gain of 0.37%. Meanwhile, the Dow experienced a drop of 0.38%, and the technology-dominated Nasdaq saw an increase of 0.83%.

Shares of the homebuilder witnessed a gain of 12.48% over the previous month, beating the performance of the Construction sector with its gain of 1.5%, and the S&P 500's loss of 2.29%.

The investment community will be closely monitoring the performance of KB Home in its forthcoming earnings report. In that report, analysts expect KB Home to post earnings of $1.21 per share. This would mark a year-over-year decline of 36.98%. Simultaneously, our latest consensus estimate expects the revenue to be $1.53 billion, showing a 9.81% drop compared to the year-ago quarter.

Regarding the entire year, the Zacks Consensus Estimates forecast earnings of $3.26 per share and revenue of $5.02 billion, indicating changes of -50% and -19.55%, respectively, compared to the previous year.

It's also important for investors to be aware of any recent modifications to analyst estimates for KB Home. These latest adjustments often mirror the shifting dynamics of short-term business patterns. Therefore, positive revisions in estimates convey analysts' confidence in the business performance and profit potential.

Our research suggests that these changes in estimates have a direct relationship with upcoming stock price performance. 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, 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. Over the last 30 days, the Zacks Consensus EPS estimate has moved 0.26% higher. Currently, KB Home is carrying a Zacks Rank of #3 (Hold).

In the context of valuation, KB Home is at present trading with a Forward P/E ratio of 15.54. This valuation marks a premium compared to its industry average Forward P/E of 14.3.

Meanwhile, KBH's PEG ratio is currently 2.63. The PEG ratio bears resemblance to the frequently used P/E ratio, but this parameter also includes the company's expected earnings growth trajectory. The average PEG ratio for the Building Products - Home Builders industry stood at 2.4 at the close of the market yesterday.

The Building Products - Home Builders industry is part of the Construction sector. This industry, currently bearing a Zacks Industry Rank of 235, finds itself in the bottom 5% echelons 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.

Don't forget to use Zacks.com to keep track of all these stock-moving metrics, and others, in the upcoming trading sessions.

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