NEW YORK (
-- KB Home
) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including generally poor debt management and poor profit margins.
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Highlights from the ratings report include:
- The revenue growth greatly exceeded the industry average of 32.7%. Since the same quarter one year prior, revenues rose by 11.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- KB HOME reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, KB HOME reported poor results of -$2.33 versus -$0.90 in the prior year. This year, the market expects an improvement in earnings (-$1.01 versus -$2.33).
- The gross profit margin for KB HOME is currently extremely low, coming in at 14.40%. Regardless of KBH's low profit margin, it has managed to increase from the same period last year.
- The debt-to-equity ratio is very high at 4.28 and currently higher than the industry average, implying that there is very poor management of debt levels within the company.
KB Home operates as a homebuilding and financial services company in the United States. KB Home has a market cap of $718 million and is part of the
industry. Shares are up 44% year to date as of the close of trading on Friday.
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-- Written by a member of TheStreet Ratings Staff
TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.