NYSE:KBH, an undervalued stock with good fundamentals.

Last update: Apr 16, 2024

Our stock screening tool has pinpointed KB HOME (NYSE:KBH) as an undervalued stock. NYSE:KBH maintains a solid financial footing. Furthermore, it remains attractively priced. Let's delve into the specifics below.

A Closer Look at Valuation for NYSE:KBH

To assess a stock's valuation, ChartMill utilizes a Valuation Rating on a scale of 0 to 10. This comprehensive assessment considers various valuation aspects, comparing price to earnings and cash flows, while factoring in profitability and growth. NYSE:KBH has achieved a 8 out of 10:

Based on the Price/Earnings ratio of 8.59, the valuation of KBH can be described as reasonable.
Based on the Price/Earnings ratio, KBH is valued cheaply inside the industry as 85.07% of the companies are valued more expensively.
When comparing the Price/Earnings ratio of KBH to the average of the S&P500 Index (25.05), we can say KBH is valued rather cheaply.
Based on the Price/Forward Earnings ratio of 7.36, the valuation of KBH can be described as very cheap.
KBH's Price/Forward Earnings ratio is rather cheap when compared to the industry. KBH is cheaper than 94.03% of the companies in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 21.53, KBH is valued rather cheaply.
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of KBH indicates a somewhat cheap valuation: KBH is cheaper than 74.63% of the companies listed in the same industry.
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's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
The decent profitability rating of KBH may justify a higher PE ratio.

How do we evaluate the Profitability for NYSE:KBH?

ChartMill employs its own Profitability Rating system for stock evaluation. This score, ranging from 0 to 10, is derived from an analysis of diverse profitability metrics and margins. In the case of NYSE:KBH, the assigned 6 is noteworthy for profitability:

The Return On Assets of KBH (8.96%) is better than 73.13% of its industry peers.
With a decent Return On Equity value of 15.42%, KBH is doing good in the industry, outperforming 70.15% of the companies in the same industry.
KBH's Return On Invested Capital of 10.10% is fine compared to the rest of the industry. KBH outperforms 65.67% of its industry peers.
Looking at the Profit Margin, with a value of 9.22%, KBH is in the better half of the industry, outperforming 71.64% of the companies in the same industry.
KBH's Profit Margin has improved in the last couple of years.
KBH has a better Operating Margin (11.45%) than 67.16% of its industry peers.
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 employs a unique Health Rating system for all stocks. This rating, ranging from 0 to 10, is determined by analyzing various liquidity and solvency ratios. For NYSE:KBH, the assigned 7 for health provides valuable insights:

KBH has an Altman-Z score of 4.09. This indicates that KBH is financially healthy and has little risk of bankruptcy at the moment.
KBH's Altman-Z score of 4.09 is fine compared to the rest of the industry. KBH outperforms 70.15% of its industry peers.
The Debt to FCF ratio of KBH is 1.73, which is an excellent value as it means it would take KBH, only 1.73 years of fcf income to pay off all of its debts.
With a decent Debt to FCF ratio value of 1.73, KBH is doing good in the industry, outperforming 70.15% of the companies in the same industry.
A Debt/Equity ratio of 0.44 indicates that KBH is not too dependend on debt financing.
A Current Ratio of 5.91 indicates that KBH has no problem at all paying its short term obligations.
KBH has a better Current ratio (5.91) than 82.09% of its industry peers.

What does the Growth looks like for NYSE:KBH

ChartMill assigns a Growth Rating to each stock, ranging from 0 to 10. This rating is determined by analyzing different growth elements, including EPS and revenue growth, spanning both historical and future figures. In the case of NYSE:KBH, the assigned 4 reflects its growth potential:

The Earnings Per Share has been growing by 20.25% on average over the past years. This is a very strong growth
The Earnings Per Share is expected to grow by 11.59% on average over the next years. This is quite good.

Our Decent Value screener lists more Decent Value stocks and is updated daily.

Check the latest full fundamental report of KBH for a complete fundamental analysis.

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.