NYSE:KBH, an undervalued stock with good fundamentals.

Last update: Oct 18, 2023

Consider KB HOME (NYSE:KBH) as a top value stock, identified by our stock screening tool. NYSE:KBH shines in terms of profitability, solvency, and liquidity, all while remaining very reasonably priced. Let's dive deeper into the analysis.

Deciphering NYSE:KBH's Valuation Rating

ChartMill assigns a Valuation Rating to each stock, ranging from 0 to 10. This rating is calculated by analyzing different valuation elements, such as price to earnings and free cash flow, both in absolute terms and relative to the market and industry. In the case of NYSE:KBH, the assigned 8 reflects its valuation:

With a Price/Earnings ratio of 5.82, the valuation of KBH can be described as very cheap.
KBH's Price/Earnings ratio is rather cheap when compared to the industry. KBH is cheaper than 83.58% of the companies in the same industry.
KBH's Price/Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 26.01.
A Price/Forward Earnings ratio of 6.27 indicates a rather cheap valuation of KBH.
KBH's Price/Forward Earnings ratio is rather cheap when compared to the industry. KBH is cheaper than 80.60% of the companies in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 19.04. KBH is valued rather cheaply when compared to this.
83.58% of the companies in the same industry are more expensive than KBH, based on the Enterprise Value to EBITDA ratio.
KBH's Price/Free Cash Flow ratio is rather cheap when compared to the industry. KBH is cheaper than 86.57% of the companies in the same industry.
KBH has a very decent profitability rating, which may justify a higher PE ratio.

Understanding NYSE:KBH's Profitability

ChartMill assigns a Profitability Rating to every stock. This score ranges from 0 to 10 and evaluates the different profitability ratios and margins, both absolutely, but also relative to the industry peers. NYSE:KBH scores a 7 out of 10:

With a decent Return On Assets value of 11.81%, KBH is doing good in the industry, outperforming 73.13% of the companies in the same industry.
The Return On Equity of KBH (20.27%) is better than 76.12% of its industry peers.
Looking at the Return On Invested Capital, with a value of 14.15%, KBH belongs to the top of the industry, outperforming 80.60% of the companies in the same industry.
The 3 year average ROIC (10.70%) for KBH is below the current ROIC(14.15%), indicating increased profibility in the last year.
KBH's Profit Margin of 9.63% is fine compared to the rest of the industry. KBH outperforms 71.64% of its industry peers.
KBH's Profit Margin has improved in the last couple of years.
Looking at the Operating Margin, with a value of 12.39%, KBH is in the better half of the industry, outperforming 70.15% of the companies in the same industry.
KBH's Operating Margin has improved in the last couple of years.
In the last couple of years the Gross Margin of KBH has grown nicely.

Health Assessment of NYSE:KBH

ChartMill utilizes a Health Rating to assess stocks, scoring them on a scale of 0 to 10. This rating takes into account a variety of liquidity and solvency ratios, both in absolute terms and in comparison to industry peers. NYSE:KBH has earned a 7 out of 10:

An Altman-Z score of 4.19 indicates that KBH is not in any danger for bankruptcy at the moment.
With a decent Altman-Z score value of 4.19, KBH is doing good in the industry, outperforming 76.12% of the companies in the same industry.
KBH has a debt to FCF ratio of 1.48. This is a very positive value and a sign of high solvency as it would only need 1.48 years to pay back of all of its debts.
KBH has a better Debt to FCF ratio (1.48) than 68.66% of its industry peers.
A Debt/Equity ratio of 0.44 indicates that KBH is not too dependend on debt financing.
A Current Ratio of 6.03 indicates that KBH has no problem at all paying its short term obligations.
The Current ratio of KBH (6.03) is better than 80.60% of its industry peers.

Growth Analysis for NYSE:KBH

To evaluate a stock's growth potential, ChartMill utilizes a Growth Rating on a scale of 0 to 10. This comprehensive assessment considers various growth aspects, including historical and estimated EPS and revenue growth. NYSE:KBH has achieved a 4 out of 10:

KBH shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 37.97% yearly.
Measured over the past years, KBH shows a quite strong growth in Revenue. The Revenue has been growing by 9.58% on average per year.

More Decent Value stocks can be found in our Decent Value screener.

For an up to date full fundamental analysis you can check the fundamental report of KBH

Keep in mind

Important Note: The content of this article is not intended as trading advice. It is essential to perform your own analysis and exercise caution when making trading decisions. The article presents observations created by automated analysis but does not guarantee any trading or investment outcomes. Always trade responsibly and make independent judgments.