KB HOME (NYSE:KBH) appears to be flying under the radar despite its strong fundamentals.

Our stock screening tool has identified KB HOME (NYSE:KBH) as an undervalued gem with strong fundamentals. NYSE:KBH boasts decent financial health and profitability while maintaining an attractive price point. We'll break it down further.

How We Gauge Valuation for NYSE:KBH

ChartMill assigns a Valuation Rating to every stock. This score ranges from 0 to 10 and evaluates the different valuation aspects and compares the price to earnings and cash flows, while taking into account profitability and growth. NYSE:KBH scores a 7 out of 10:

• The Price/Earnings ratio is 7.40, which indicates a rather cheap valuation of KBH.
• 77.27% of the companies in the same industry are more expensive than KBH, based on the Price/Earnings ratio.
• KBH is valuated cheaply when we compare the Price/Earnings ratio to 28.59, which is the current average of the S&P500 Index.
• KBH is valuated cheaply with a Price/Forward Earnings ratio of 7.41.
• KBH's Price/Forward Earnings ratio is a bit cheaper when compared to the industry. KBH is cheaper than 77.27% of the companies in the same industry.
• KBH is valuated cheaply when we compare the Price/Forward Earnings ratio to 21.45, which is the current average of the S&P500 Index.
• Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of KBH indicates a rather cheap valuation: KBH is cheaper than 84.85% of the companies listed in the same industry.
• Based on the Price/Free Cash Flow ratio, KBH is valued a bit cheaper than 71.21% of the companies in the same industry.
• KBH has a very decent profitability rating, which may justify a higher PE ratio.

What does the Profitability looks like for NYSE:KBH

ChartMill's Profitability Rating offers a unique perspective on stock analysis, providing scores from 0 to 10. These ratings consider a wide range of profitability metrics and margins, both in comparison to industry peers and on their own merits. For NYSE:KBH, the assigned 7 is a significant indicator of profitability:

• KBH has a Return On Assets of 11.36%. This is amongst the best in the industry. KBH outperforms 84.85% of its industry peers.
• KBH has a better Return On Equity (19.40%) than 81.82% of its industry peers.
• KBH's Return On Invested Capital of 12.54% is fine compared to the rest of the industry. KBH outperforms 72.73% of its industry peers.
• The 3 year average ROIC (11.76%) for KBH is below the current ROIC(12.54%), indicating increased profibility in the last year.
• KBH's Profit Margin of 9.38% is fine compared to the rest of the industry. KBH outperforms 74.24% of its industry peers.
• KBH's Profit Margin has improved in the last couple of years.
• KBH has a better Operating Margin (11.29%) than 68.18% of its industry peers.
• In the last couple of years the Operating Margin of KBH has grown nicely.
• KBH's Gross Margin has improved in the last couple of years.

How We Gauge Health for NYSE:KBH

ChartMill employs its own Health Rating for stock assessment. This rating, ranging from 0 to 10, is calculated by examining various liquidity and solvency ratios. In the case of NYSE:KBH, the assigned 6 reflects its health status:

• KBH has an Altman-Z score of 4.20. This indicates that KBH is financially healthy and has little risk of bankruptcy at the moment.
• KBH has a better Altman-Z score (4.20) than 65.15% of its industry peers.
• With a decent Debt to FCF ratio value of 5.23, KBH is doing good in the industry, outperforming 60.61% of the companies in the same industry.
• KBH has a Debt/Equity ratio of 0.42. This is a healthy value indicating a solid balance between debt and equity.
• A Current Ratio of 5.74 indicates that KBH has no problem at all paying its short term obligations.
• KBH has a better Current ratio (5.74) than 78.79% of its industry peers.

Evaluating Growth: NYSE:KBH

To evaluate a stock's growth potential, ChartMill utilizes a Growth Rating on a scale of 0 to 10. This comprehensive assessment considers various growth aspects, including historical and estimated EPS and revenue growth. NYSE:KBH has achieved a 6 out of 10:

• KBH shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 20.31%, which is quite impressive.
• KBH shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 24.25% yearly.
• The Revenue has grown by 31.00% in the past year. This is a very strong growth!
• Measured over the past years, KBH shows a quite strong growth in Revenue. The Revenue has been growing by 8.77% on average per year.

More Decent Value stocks can be found in our Decent Value screener.

For an up to date full fundamental analysis you can check the fundamental report of KBH

Keep in mind

This is not investing advice! The article highlights some of the observations at the time of writing, but you should always make your own analysis and invest based on your own insights.