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KB Home (KBH) Gains As Market Dips: What You Should Know

Zacks Equity Research

KB Home (KBH) closed the most recent trading day at $34.84, moving +1.9% from the previous trading session. The stock outpaced the S&P 500's daily loss of 0.32%. Meanwhile, the Dow lost 0.38%, and the Nasdaq, a tech-heavy index, lost 0.4%.

Coming into today, shares of the homebuilder had gained 5.07% in the past month. In that same time, the Construction sector gained 1.4%, while the S&P 500 gained 2.51%.

Wall Street will be looking for positivity from KBH as it approaches its next earnings report date. On that day, KBH is projected to report earnings of $1.31 per share, which would represent year-over-year growth of 36.46%. Meanwhile, our latest consensus estimate is calling for revenue of $1.60 billion, up 18.54% from the prior-year quarter.

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 a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

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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. The Zacks Consensus EPS estimate has moved 0.28% higher within the past month. KBH is currently sporting a Zacks Rank of #3 (Hold).

Digging into valuation, KBH currently has a Forward P/E ratio of 9.89. Its industry sports an average Forward P/E of 9.99, so we one might conclude that KBH is trading at a discount comparatively.

Also, we should mention that KBH has a PEG ratio of 1.06. 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. Building Products - Home Builders stocks are, on average, holding a PEG ratio of 1.09 based on yesterday's closing prices.

The Building Products - Home Builders industry is part of the Construction sector. This industry currently has a Zacks Industry Rank of 31, which puts it in the top 13% of all 250+ industries.

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

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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