Rating Change #4
KB Home (KBH) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, poor profit margins, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.
Highlights from the ratings report include:
- The change in net income from the same quarter one year ago has significantly exceeded that of the Household Durables industry average, but is less than that of the S&P 500. The net income has significantly decreased by 123.1% when compared to the same quarter one year ago, falling from -$30.71 million to -$68.50 million.
- KB HOME has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, KB HOME continued to lose money by earning -$0.90 versus -$1.34 in the prior year. For the next year, the market is expecting a contraction of 177.2% in earnings (-$2.50 versus -$0.90).
- The share price of KB HOME has not done very well: it is down 6.14% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- The gross profit margin for KB HOME is currently extremely low, coming in at 7.90%. It has decreased significantly from the same period last year.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Household Durables industry and the overall market, KB HOME's return on equity significantly trails that of both the industry average and the S&P 500.
KB Home operates as a homebuilding and financial services company in the United States. It constructs and sells various types of homes, including attached and detached single-family homes, townhomes, and condominiums primarily for first-time, move-up, and active adult homebuyers. KB Home has a market cap of $782.8 million and is part of the industrial goods sector and materials & construction industry. Shares are down 26.3% year to date as of the close of trading on Wednesday.You can view the full KB Home Ratings Report or get investment ideas from our investment research center.