Is KB Home (KBH) a Great Value Stock Right Now?
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Neverthe...
Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
One stock to keep an eye on is KB Home (KBH). KBH is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock has a Forward P/E ratio of 6.08. This compares to its industry's average Forward P/E of 7.26. Over the last 12 months, KBH's Forward P/E has been as high as 12.05 and as low as 5.85, with a median of 8.01.
Investors should also note that KBH holds a PEG ratio of 0.38. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. KBH's PEG compares to its industry's average PEG of 0.67. Over the past 52 weeks, KBH's PEG has been as high as 1.28 and as low as 0.33, with a median of 0.44.
We should also highlight that KBH has a P/B ratio of 1.33. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 1.54. Over the past 12 months, KBH's P/B has been as high as 1.71 and as low as 1.07, with a median of 1.37.
Value investors will likely look at more than just these metrics, but the above data helps show that KB Home is likely undervalued currently. And when considering the strength of its earnings outlook, KBH sticks out at as one of the market's strongest value stocks.
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