Overall KBH gets a fundamental rating of 5 out of 10. We evaluated KBH against 60 industry peers in the Household Durables industry. Both the profitability and the financial health of KBH get a neutral evaluation. Nothing too spectacular is happening here. KBH has a valuation in line with the averages, but it does not seem to be growing.

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1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

KBH had positive earnings in the past year.
KBH had a positive operating cash flow in the past year.
KBH had positive earnings in 4 of the past 5 years.
The reported operating cash flow has been mixed in the past 5 years: KBH reported negative operating cash flow in multiple years.

1.2 Ratios

KBH's Return On Assets of 7.36% is fine compared to the rest of the industry. KBH outperforms 68.33% of its industry peers.
KBH has a Return On Equity (13.18%) which is in line with its industry peers.
KBH has a Return On Invested Capital (8.28%) which is in line with its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for KBH is above the industry average of 9.70%.

		Industry Rank	Sector Rank
ROA	7.36%
ROE	13.18%
ROIC	8.28%

ROA(3y)10.13%

ROA(5y)9.11%

ROE(3y)17.86%

ROE(5y)16.65%

ROIC(3y)11.76%

ROIC(5y)10.39%

1.3 Margins

KBH's Profit Margin of 7.86% is fine compared to the rest of the industry. KBH outperforms 70.00% of its industry peers.
KBH's Profit Margin has improved in the last couple of years.
KBH has a better Operating Margin (9.71%) than 63.33% of its industry peers.
In the last couple of years the Operating Margin of KBH has grown nicely.
KBH has a Gross Margin of 19.96%. This is in the lower half of the industry: KBH underperforms 75.00% of its industry peers.
KBH's Gross Margin has improved in the last couple of years.

		Industry Rank	Sector Rank
OM	9.71%
PM (TTM)	7.86%
GM	19.96%

OM growth 3Y-1.36%

OM growth 5Y8.57%

PM growth 3Y-1.51%

PM growth 5Y9.84%

GM growth 3Y-0.91%

GM growth 5Y2.86%

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

KBH has a Return on Invested Capital (ROIC), which is just above the Cost of Capital (WACC), which means it is creating some value.
KBH has no outstanding debt. Therefor its Debt/Equity and Debt/FCF ratios are 0 and belong to the best of the industry.

2.2 Solvency

An Altman-Z score of 3.63 indicates that KBH is not in any danger for bankruptcy at the moment.
KBH has a Altman-Z score (3.63) which is in line with its industry peers.
KBH has a debt to FCF ratio of 5.56. This is a neutral value as KBH would need 5.56 years to pay back of all of its debts.
KBH's Debt to FCF ratio of 5.56 is in line compared to the rest of the industry. KBH outperforms 51.67% of its industry peers.
A Debt/Equity ratio of 0.50 indicates that KBH is not too dependend on debt financing.
KBH's Debt to Equity ratio of 0.50 is in line compared to the rest of the industry. KBH outperforms 41.67% of its industry peers.

		Industry Rank	Sector Rank
Debt/Equity	0.5
Debt/FCF	5.56
Altman-Z	3.63

ROIC/WACC0.94

WACC8.79%

2.3 Liquidity

A Current Ratio of 6.01 indicates that KBH has no problem at all paying its short term obligations.
KBH has a better Current ratio (6.01) than 78.33% of its industry peers.
A Quick Ratio of 0.67 indicates that KBH may have some problems paying its short term obligations.
The Quick ratio of KBH (0.67) is worse than 65.00% of its industry peers.

		Industry Rank	Sector Rank
Current Ratio	6.01
Quick Ratio	0.67

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WACC

Debt/Equity

How to determine the health of a company

Altman-Z score

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3. Growth

3.1 Past

KBH shows a strong negative growth in Earnings Per Share. In the last year the EPS decreased by -23.02%.
Measured over the past years, KBH shows a quite strong growth in Earnings Per Share. The EPS has been growing by 15.81% on average per year.

EPS 1Y (TTM)-23.02%

EPS 3Y-10.68%

EPS 5Y15.81%

EPS Q2Q%-23.81%

Revenue 1Y (TTM)N/A

Revenue growth 3YN/A

Revenue growth 5YN/A

Sales Q2Q%-15.28%

3.2 Future

The Earnings Per Share is expected to grow by 2.08% on average over the next years.
KBH is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 0.44% yearly.

EPS Next Y-33.49%

EPS Next 2Y-7.66%

EPS Next 3Y2.08%

EPS Next 5YN/A

Revenue Next Year-10.91%

Revenue Next 2Y-2.48%

Revenue Next 3Y0.44%

Revenue Next 5YN/A

3.3 Evolution

The EPS growth rate is decreasing: in the next years the growth will be less than in the last years.

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4. Valuation

4.1 Price/Earnings Ratio

KBH is valuated reasonably with a Price/Earnings ratio of 8.97.
Based on the Price/Earnings ratio, KBH is valued a bit cheaper than 80.00% of the companies in the same industry.
The average S&P500 Price/Earnings ratio is at 27.25. KBH is valued rather cheaply when compared to this.
With a Price/Forward Earnings ratio of 13.49, KBH is valued correctly.
63.33% of the companies in the same industry are more expensive than KBH, based on the Price/Forward Earnings ratio.
Compared to an average S&P500 Price/Forward Earnings ratio of 25.98, KBH is valued a bit cheaper.

		Industry Rank	Sector Rank
PE	8.97
Fwd PE	13.49

4.2 Price Multiples

The rest of the industry has a similar Enterprise Value to EBITDA ratio as KBH.
78.33% of the companies in the same industry are more expensive than KBH, based on the Price/Free Cash Flow ratio.

		Industry Rank	Sector Rank
P/FCF	10.83
EV/EBITDA	8.09

4.3 Compensation for Growth

The decent profitability rating of KBH may justify a higher PE ratio.

PEG (NY)N/A

PEG (5Y)0.57

EPS Next 2Y-7.66%

EPS Next 3Y2.08%

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5. Dividend

5.1 Amount

KBH has a Yearly Dividend Yield of 1.66%. Purely for dividend investing, there may be better candidates out there.
Compared to an average industry Dividend Yield of 1.17, KBH pays a bit more dividend than its industry peers.
Compared to an average S&P500 Dividend Yield of 1.82, KBH has a dividend comparable with the average S&P500 company.

		Industry Rank	Sector Rank
Dividend Yield	1.66%

5.2 History

On average, the dividend of KBH grows each year by 34.29%, which is quite nice.
KBH has paid a dividend for at least 10 years, which is a reliable track record.
KBH has not decreased their dividend for at least 10 years, which is a reliable track record.

Dividend Growth(5Y)34.29%

Div Incr Years2

Div Non Decr Years11

5.3 Sustainability

13.77% of the earnings are spent on dividend by KBH. This is a low number and sustainable payout ratio.
KBH's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.

DP13.77%

EPS Next 2Y-7.66%

EPS Next 3Y2.08%

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KB HOME / KBH FAQ

What is the ChartMill fundamental rating of KB HOME (KBH) stock?

ChartMill assigns a fundamental rating of 5 / 10 to KBH.

What is the valuation status for KBH stock?

ChartMill assigns a valuation rating of 5 / 10 to KB HOME (KBH). This can be considered as Fairly Valued.

How profitable is KB HOME (KBH) stock?

KB HOME (KBH) has a profitability rating of 6 / 10.

How financially healthy is KB HOME?

The financial health rating of KB HOME (KBH) is 5 / 10.

Can you provide the expected EPS growth for KBH stock?

The Earnings per Share (EPS) of KB HOME (KBH) is expected to decline by -33.49% in the next year.