For those who appreciate value investing, NYSE:KBH is a compelling option with its solid fundamentals.

Last update: May 8, 2024

Our stock screening tool has pinpointed KB HOME (NYSE:KBH) as an undervalued stock option. NYSE:KBH retains a strong financial foundation and an attractive price tag. Let's delve into the specifics below.

How We Gauge Valuation for NYSE:KBH

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:

Based on the Price/Earnings ratio of 9.49, the valuation of KBH can be described as reasonable.
Based on the Price/Earnings ratio, KBH is valued a bit cheaper than 77.27% of the companies in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 28.11, KBH is valued rather cheaply.
With a Price/Forward Earnings ratio of 8.13, the valuation of KBH can be described as very reasonable.
KBH's Price/Forward Earnings ratio is rather cheap when compared to the industry. KBH is cheaper than 86.36% of the companies in the same industry.
When comparing the Price/Forward Earnings ratio of KBH to the average of the S&P500 Index (20.39), we can say KBH is valued rather cheaply.
KBH's Enterprise Value to EBITDA ratio is a bit cheaper when compared to the industry. KBH is cheaper than 63.64% of the companies in the same industry.
84.85% of the companies in the same industry are more expensive than KBH, based on the Price/Free Cash Flow ratio.
The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
KBH has a very decent profitability rating, which may justify a higher PE ratio.

Profitability Insights: NYSE:KBH

Discover ChartMill's exclusive Profitability Rating, a proprietary metric that assesses stocks on a scale of 0 to 10. It takes into consideration various profitability ratios and margins, both in absolute terms and relative to industry peers. Notably, NYSE:KBH has achieved a 6:

Looking at the Return On Assets, with a value of 8.96%, KBH is in the better half of the industry, outperforming 71.21% of the companies in the same industry.
KBH has a better Return On Equity (15.42%) than 71.21% of its industry peers.
Looking at the Return On Invested Capital, with a value of 10.10%, KBH is in the better half of the industry, outperforming 63.64% of the companies in the same industry.
KBH has a Profit Margin of 9.22%. This is in the better half of the industry: KBH outperforms 71.21% of its industry peers.
In the last couple of years the Profit Margin of KBH has grown nicely.
KBH's Operating Margin of 11.45% is fine compared to the rest of the industry. KBH outperforms 65.15% of its industry peers.
KBH's Operating Margin has improved in the last couple of years.
KBH's Gross Margin has improved in the last couple of years.

Evaluating Health: NYSE:KBH

Every stock is evaluated by ChartMill, receiving a Health Rating on a scale of 0 to 10. This assessment considers different health aspects, including liquidity and solvency, both in absolute terms and relative to industry peers. NYSE:KBH has achieved a 7 out of 10:

KBH has an Altman-Z score of 4.21. This indicates that KBH is financially healthy and has little risk of bankruptcy at the moment.
The Altman-Z score of KBH (4.21) is better than 65.15% 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 69.70% of the companies in the same industry.
KBH has a Debt/Equity ratio of 0.44. This is a healthy value indicating a solid balance between debt and equity.
KBH has a Current Ratio of 5.91. This indicates that KBH is financially healthy and has no problem in meeting its short term obligations.
Looking at the Current ratio, with a value of 5.91, KBH belongs to the top of the industry, outperforming 81.82% of the companies in the same industry.

Evaluating Growth: 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:

KBH shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 20.25% yearly.
The Earnings Per Share is expected to grow by 11.59% on average over the next years. This is quite good.

Every day, new Decent Value stocks can be found on ChartMill in our Decent Value screener.

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

Keep in mind

This article should in no way be interpreted as advice in any way. The article is based on the observed metrics at the time of writing, but you should always make your own analysis and trade or invest at your own responsibility.