Yahoo Finance Is KB Home (KBH) Stock Undervalued Right Now?
The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
One company value investors might notice is KB Home (KBH). KBH is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with P/E ratio of 7.87 right now. For comparison, its industry sports an average P/E of 9.78. Over the past 52 weeks, KBH's Forward P/E has been as high as 9.71 and as low as 2.44, with a median of 4.92.
Another notable valuation metric for KBH is its P/B ratio of 0.98. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 1.29. KBH's P/B has been as high as 1.03 and as low as 0.63, with a median of 0.80, over the past year.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. KBH has a P/S ratio of 0.55. This compares to its industry's average P/S of 0.72.
Finally, our model also underscores that KBH has a P/CF ratio of 4.47. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 5.90. KBH's P/CF has been as high as 4.69 and as low as 2.80, with a median of 3.66, all within the past year.
Another great Building Products - Home Builders stock you could consider is Taylor Morrison Home (TMHC), which is a # 2 (Buy) stock with a Value Score of A.
Furthermore, Taylor Morrison Home holds a P/B ratio of 0.96 and its industry's price-to-book ratio is 1.29. TMHC's P/B has been as high as 1.02, as low as 0.57, with a median of 0.75 over the past 12 months.
These figures are just a handful of the metrics value investors tend to look at, but they help show that KB Home and Taylor Morrison Home are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, KBH and TMHC feels like a great value stock at the moment.
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KB Home (KBH) : Free Stock Analysis Report
Taylor Morrison Home Corporation (TMHC) : Free Stock Analysis Report
