KB Home

KBH Details

KB Home (NYSE: KBH) is a large homebuilder in the United States, having built over 645 thousand homes throughout its more than 60-year history. In addition, KBH provides both house construction and financial services such as mortgages and insurance in the West Coast (California and Washington), Southwest (Arizona and Nevada), Central (Colorado and Texas), and the Southeast (North Carolina and Florida) regions.

Latest News:

• Introduction of New Home Neighborhoods: According to KBH, Brookside Preserve, a new single-family home community near St. Johns, Florida, opened on October 15, 2021. This follows the October 14, 2021 news of the inauguration of Berry Springs, another single-family home development, in Georgetown, Texas.
• Dividend Declaration: On October 07, 2021, KBH declared a quarterly cash dividend of USD 0.15 per share, payable on November 24, 2021, to shareholders of record on November 11, 2021.

9MFY21 Results:

• Boost in Revenue: Due to growth in housing revenues, KBH's overall revenues during 9MFY21 (ended August 31, 2021) were USD 4.05 billion, up 35.49% from USD 2.99 billion in 9MFY20.
• Enhancement in Net Income: During 9MFY21, net income increased to USD 390.51 million, up from USD 190.15 million during 9MFY20.
• Progress in Net Orders: KBH had 12,677 net orders with a total net order value of USD 5.92 billion during 9MFY21, up from 9,467 orders valued at USD 3.71 billion during 9MFY20.

Key Risks:

• Soaring Housing Prices: Over the previous several years, continuous demand for housing and dropping house inventories, showing a limited supply of new houses compared to historical levels, has contributed to an above-average home price rise in most places. However, if housing prices climb faster than consumer income, most homebuyers would be unable to purchase a home, which will harm the company's operations.

Valuation Methodology: EV/EBITDA Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

KBH Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

KBH's share price has surged 21.78% in the past twelve months and is currently trading below the mid-point of the 52-week range of USD 30.25 to USD 52.48. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 50.77. We have valued the stock using the EV/EBITDA-based relative valuation methodology and arrived at a target price of USD 37.24.

Considering the uptick in the stock price, change in macroeconomic factors, and other technical indicators, we believe the decent business fundamentals are adequately reflected at the current trading levels. Hence, we recommend a "Sell" rating on the stock at the current price of USD 40.43, up 0.42% as of October 29, 2021, 11:36 AM ET.

*All forecasted figures and Industry Information have been taken from REFINITIV.

*The reference data in this report has been partly sourced from REFINITIV.