Critical Analysis: KB Home (KBH) vs. Its Rivals

KB Home (NYSE: KBH) is one of 22 publicly-traded companies in the “Homebuilding” industry, but how does it contrast to its peers? We will compare KB Home to similar companies based on the strength of its risk, analyst recommendations, institutional ownership, profitability, earnings, dividends and valuation.

Earnings & Valuation

This table compares KB Home and its peers top-line revenue, earnings per share and valuation.

Gross Revenue Net Income Price/Earnings Ratio
KB Home $3.59 billion $105.61 million 21.67
KB Home Competitors $3.83 billion $231.12 million 488.03

KB Home’s peers have higher revenue and earnings than KB Home. KB Home is trading at a lower price-to-earnings ratio than its peers, indicating that it is currently more affordable than other companies in its industry.

Profitability

This table compares KB Home and its peers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
KB Home 3.22% 7.57% 2.66%
KB Home Competitors 9.78% 14.52% 7.94%

Insider and Institutional Ownership

97.0% of KB Home shares are held by institutional investors. Comparatively, 78.9% of shares of all “Homebuilding” companies are held by institutional investors. 8.6% of KB Home shares are held by company insiders. Comparatively, 13.1% of shares of all “Homebuilding” companies are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Dividends

KB Home pays an annual dividend of $0.10 per share and has a dividend yield of 0.3%. KB Home pays out 7.2% of its earnings in the form of a dividend. As a group, “Homebuilding” companies pay a dividend yield of 0.8% and pay out 14.5% of their earnings in the form of a dividend.

Volatility and Risk

KB Home has a beta of 1.69, suggesting that its stock price is 69% more volatile than the S&P 500. Comparatively, KB Home’s peers have a beta of 1.51, suggesting that their average stock price is 51% more volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings and target prices for KB Home and its peers, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
KB Home 4 12 0 0 1.75
KB Home Competitors 265 1613 1862 36 2.44

KB Home presently has a consensus target price of $21.93, indicating a potential downside of 27.20%. As a group, “Homebuilding” companies have a potential downside of 1.60%. Given KB Home’s peers stronger consensus rating and higher probable upside, analysts clearly believe KB Home has less favorable growth aspects than its peers.

Summary

KB Home peers beat KB Home on 12 of the 15 factors compared.

About KB Home

KB HOME is a homebuilding company. The Company is engaged in selling and building a range of new homes designed primarily for first-time, move-up and active adult homebuyers, including attached and detached single-family residential homes. It operates through five segments, which consist of four homebuilding segments and one financial services segment. Its homebuilding segments include West Coast, Southwest, Central and Southeast. The homebuilding segments are engaged in the acquisition and development of land primarily for residential purposes. The financial services segment offers property and casualty insurance and, in certain instances, earthquake, flood and personal property insurance to its homebuyers in the same markets as its homebuilding segments, and provides title services in the majority of markets located within its Central and Southeast homebuilding segments. It offers homes in development communities, at urban in-fill locations and as part of mixed-use projects.

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