Don't overlook NYSE:KBH—it's a hidden gem with strong fundamentals and an attractive price tag.

Last update: Nov 12, 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.

Valuation Analysis for NYSE:KBH

ChartMill assigns a proprietary Valuation Rating to each stock. The score is computed by evaluating various valuation aspects, like price to earnings and free cash flow, both absolutely as relative to the market and industry. NYSE:KBH was assigned a score of 7 for valuation:

A Price/Earnings ratio of 10.61 indicates a reasonable valuation of KBH.
Based on the Price/Earnings ratio, KBH is valued a bit cheaper than the industry average as 70.97% of the companies are valued more expensively.
KBH's Price/Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 29.38.
With a Price/Forward Earnings ratio of 9.01, the valuation of KBH can be described as very reasonable.
83.87% of the companies in the same industry are more expensive than KBH, based on the Price/Forward Earnings ratio.
Compared to an average S&P500 Price/Forward Earnings ratio of 23.98, KBH is valued rather cheaply.
Based on the Enterprise Value to EBITDA ratio, KBH is valued a bit cheaper than the industry average as 72.58% of the companies are valued more expensively.
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.
KBH's earnings are expected to grow with 12.80% in the coming years. This may justify a more expensive valuation.

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 7 is noteworthy for profitability:

The Return On Assets of KBH (10.93%) is better than 80.65% of its industry peers.
KBH has a Return On Equity of 18.75%. This is in the better half of the industry: KBH outperforms 74.19% of its industry peers.
With a decent Return On Invested Capital value of 12.03%, KBH is doing good in the industry, outperforming 70.97% of the companies in the same industry.
The 3 year average ROIC (11.87%) for KBH is below the current ROIC(12.03%), indicating increased profibility in the last year.
With a decent Profit Margin value of 9.26%, KBH is doing good in the industry, outperforming 74.19% of the companies in the same industry.
In the last couple of years the Profit Margin of KBH has grown nicely.
KBH's Operating Margin of 11.17% is fine compared to the rest of the industry. KBH outperforms 62.90% of its industry peers.
In the last couple of years the Operating Margin of KBH has grown nicely.
KBH's Gross Margin has improved in the last couple of years.

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 5 out of 10:

KBH has an Altman-Z score of 4.66. 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 4.66, KBH is in the better half of the industry, outperforming 66.13% of the companies in the same industry.
A Debt/Equity ratio of 0.42 indicates that KBH is not too dependend on debt financing.
A Current Ratio of 5.77 indicates that KBH has no problem at all paying its short term obligations.
KBH has a better Current ratio (5.77) than 75.81% of its industry peers.

Evaluating Growth: NYSE:KBH

Every stock receives a Growth Rating from ChartMill, ranging from 0 to 10. This rating assesses various growth aspects, including historical and projected EPS and revenue growth. NYSE:KBH boasts a 5 out of 10:

KBH shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 20.25% yearly.
The Revenue has grown by 20.90% in the past year. This is a very strong growth!
The Earnings Per Share is expected to grow by 12.80% 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.

Our latest full fundamental report of KBH contains the most current fundamental analsysis.

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.