NEW YORK ( TheStreet) -- KB Home (NYSE: KBH) 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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- 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.
-- Written by a member of TheStreet Ratings Staff