KB Home (KBH) Cut to Sell at Zacks Investment Research

Zacks Investment Research downgraded shares of KB Home (NYSE:KBH) from a hold rating to a sell rating in a report published on Monday morning.

According to Zacks, “Rising labor costs are threatening KB Home’s growth prospective as they limit homebuilders’ pricing power.  Also, land prices are increasing due to limited availability. Moreover, the recently imposed tariff on imported steel and aluminum is a big concern. The rise in mortgage rates may also likely to hit buyers’ affordability. Meanwhile, earnings estimates for fiscal 2018 and 2019 have moved south over the past seven days limiting upside potential for the stock. However, company’s shares have gained 20.2% in the past year, outperforming its industry’s decline of 2.9%. The outperformance was backed by an impressive earnings surprise history, beating the consensus mark for 10 straight quarters given its built-to-order approach and returns-focused growth plan.”

KBH has been the subject of several other reports. Credit Suisse Group decreased their target price on shares of KB Home from $32.00 to $29.00 and set a neutral rating for the company in a research report on Friday, June 29th. ValuEngine downgraded shares of KB Home from a hold rating to a sell rating in a research report on Wednesday, July 25th. Barclays raised shares of KB Home from an underweight rating to an equal weight rating in a research report on Friday, June 29th. Bank of America raised shares of KB Home from an underperform rating to a buy rating and boosted their target price for the stock from $32.00 to $37.00 in a research report on Friday, June 29th. Finally, Wedbush reissued a neutral rating and set a $29.00 target price (up from $25.00) on shares of KB Home in a research report on Thursday, September 20th. Three analysts have rated the stock with a sell rating, eleven have given a hold rating and five have assigned a buy rating to the stock. The stock has an average rating of Hold and a consensus target price of $31.06.

NYSE:KBH opened at $24.51 on Monday. The stock has a market cap of $2.22 billion, a PE ratio of 9.44, a price-to-earnings-growth ratio of 0.51 and a beta of 1.38. KB Home has a one year low of $21.32 and a one year high of $38.80.

KB Home (NYSE:KBH) last posted its earnings results on Tuesday, September 25th. The construction company reported $0.87 EPS for the quarter, topping the consensus estimate of $0.77 by $0.10. The company had revenue of $1.23 billion during the quarter, compared to the consensus estimate of $1.27 billion. KB Home had a net margin of 3.43% and a return on equity of 14.18%. The firm’s revenue for the quarter was up 7.1% on a year-over-year basis. During the same period in the previous year, the firm posted $0.51 earnings per share. research analysts anticipate that KB Home will post 2.81 EPS for the current year.

In other KB Home news, CEO Jeffrey T. Mezger sold 100,000 shares of the company’s stock in a transaction dated Tuesday, August 14th. The shares were sold at an average price of $23.56, for a total value of $2,356,000.00. Following the completion of the sale, the chief executive officer now directly owns 861,287 shares of the company’s stock, valued at approximately $20,291,921.72. The sale was disclosed in a legal filing with the Securities & Exchange Commission, which is available at the SEC website. Also, insider Jeffrey T. Mezger sold 272,818 shares of the business’s stock in a transaction dated Thursday, August 16th. The shares were sold at an average price of $23.39, for a total transaction of $6,381,213.02. Following the completion of the transaction, the insider now owns 861,287 shares in the company, valued at $20,145,502.93. The disclosure for this sale can be found here. Insiders sold a total of 497,818 shares of company stock valued at $11,752,213 over the last ninety days. 8.60% of the stock is currently owned by insiders.

Institutional investors and hedge funds have recently added to or reduced their stakes in the business. Itau Unibanco Holding S.A. purchased a new position in KB Home in the second quarter valued at about $115,000. CenterStar Asset Management LLC purchased a new position in KB Home in the second quarter valued at about $128,000. Cerebellum GP LLC purchased a new position in KB Home in the second quarter valued at about $176,000. Point72 Asia Hong Kong Ltd purchased a new position in KB Home in the first quarter valued at about $238,000. Finally, Koch Industries Inc. purchased a new position in KB Home in the first quarter valued at about $246,000. Hedge funds and other institutional investors own 85.33% of the company’s stock.

About KB Home

KB Home operates as a homebuilding company in the United States. It builds and sells various homes, including attached and detached single-family residential homes, townhomes, and condominiums primarily for first-time, first move-up, and active adult homebuyers. The company also provides property and casualty insurance, as well as earthquake, flood, and personal property insurance to its homebuyers; title services; and mortgage banking services, including residential mortgage loan originations to its homebuyers.

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