NYSE:KBH: good value for what you're paying.

Last update: Aug 30, 2024

KB HOME (NYSE:KBH) has caught the attention of our stock screener as a great value stock. NYSE:KBH excels in profitability, solvency, and liquidity, all while being very reasonably priced. Let's delve into the details.

Looking at the Valuation

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 7 reflects its valuation:

KBH is valuated reasonably with a Price/Earnings ratio of 11.03.
Compared to the rest of the industry, the Price/Earnings ratio of KBH indicates a somewhat cheap valuation: KBH is cheaper than 67.69% of the companies listed in the same industry.
KBH is valuated cheaply when we compare the Price/Earnings ratio to 30.07, which is the current average of the S&P500 Index.
Based on the Price/Forward Earnings ratio of 9.31, the valuation of KBH can be described as reasonable.
78.46% of the companies in the same industry are more expensive than KBH, based on the Price/Forward Earnings ratio.
The average S&P500 Price/Forward Earnings ratio is at 21.69. KBH is valued rather cheaply when compared to this.
75.38% of the companies in the same industry are more expensive than KBH, based on the Price/Free Cash Flow ratio.
KBH's 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.
A more expensive valuation may be justified as KBH's earnings are expected to grow with 12.55% in the coming years.

Assessing Profitability for 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:

KBH's Return On Assets of 8.86% is fine compared to the rest of the industry. KBH outperforms 66.15% of its industry peers.
KBH has a Return On Equity of 15.10%. This is in the better half of the industry: KBH outperforms 64.62% of its industry peers.
KBH has a better Return On Invested Capital (9.73%) than 61.54% of its industry peers.
KBH has a Profit Margin of 9.36%. This is in the better half of the industry: KBH outperforms 75.38% of its industry peers.
In the last couple of years the Profit Margin of KBH has grown nicely.
With a decent Operating Margin value of 11.35%, KBH is doing good in the industry, outperforming 63.08% of the companies in the same industry.
In the last couple of years the Operating Margin of KBH has grown nicely.
In the last couple of years the Gross Margin of KBH has grown nicely.

Health Insights: NYSE:KBH

ChartMill assigns a proprietary Health Rating to each stock. The score is computed by evaluating various liquidity and solvency ratios and ranges from 0 to 10. NYSE:KBH was assigned a score of 7 for health:

KBH has an Altman-Z score of 4.39. This indicates that KBH is financially healthy and has little risk of bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 4.39, KBH is in the better half of the industry, outperforming 67.69% of the companies in the same industry.
KBH has a debt to FCF ratio of 3.22. This is a good value and a sign of high solvency as KBH would need 3.22 years to pay back of all of its debts.
The Debt to FCF ratio of KBH (3.22) is better than 61.54% of its industry peers.
A Debt/Equity ratio of 0.42 indicates that KBH is not too dependend on debt financing.
A Current Ratio of 5.95 indicates that KBH has no problem at all paying its short term obligations.
KBH's Current ratio of 5.95 is fine compared to the rest of the industry. KBH outperforms 80.00% of its industry peers.

Deciphering NYSE:KBH's Growth Rating

A key component of ChartMill's stock assessment is the Growth Rating, which spans from 0 to 10. This rating evaluates diverse growth factors, such as EPS and revenue growth, considering both past performance and future projections. NYSE:KBH has received a 4 out of 10:

Measured over the past years, KBH shows a very strong growth in Earnings Per Share. The EPS has been growing by 20.25% on average per year.
The Earnings Per Share is expected to grow by 12.55% 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.

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

Keep in mind

This is not investing advice! The article highlights some of the observations at the time of writing, but you should always make your own analysis and invest based on your own insights.