KB Home (KBH) Outpaces Stock Market Gains: What You Should Know

KB Home (KBH) closed the most recent trading day at $30.01, moving +0.6% from the previous trading session. This change outpaced the S&P 500's 0.48% gain on the day. Meanwhile, the Dow gained 0.59%, and the Nasdaq, a tech-heavy index, lost 0.15%.

Heading into today, shares of the homebuilder had gained 12.65% over the past month, outpacing the Construction sector's gain of 11.48% and the S&P 500's gain of 7.49% in that time.

Wall Street will be looking for positivity from KB Home as it approaches its next earnings report date. The company is expected to report EPS of $2.88, up 50.79% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $1.99 billion, up 19% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $9.53 per share and revenue of $6.95 billion. These totals would mark changes of +57.52% and +21.47%, respectively, from last year.

It is also important to note the recent changes to analyst estimates for KB Home. These revisions help to show the ever-changing nature of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.63% lower. KB Home is holding a Zacks Rank of #5 (Strong Sell) right now.

Valuation is also important, so investors should note that KB Home has a Forward P/E ratio of 3.13 right now. Its industry sports an average Forward P/E of 3.95, so we one might conclude that KB Home is trading at a discount comparatively.

It is also worth noting that KBH currently has a PEG ratio of 0.44. 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. Building Products - Home Builders stocks are, on average, holding a PEG ratio of 0.86 based on yesterday's closing prices.

The Building Products - Home Builders industry is part of the Construction sector. This group has a Zacks Industry Rank of 239, putting it in the bottom 6% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow KBH in the coming trading sessions, be sure to utilize Zacks.com.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.