Construction stocks and analysis

KB Home will start posting profits on Wednesday March 24th

Homebuilder giant KB Home (NYSE: KBH) KBH has exceeded earnings expectations in all four of its most recent quarterly reports, and analysts expect KB Homes to post earnings per share (EPS) of $ 0.92 on March 24th. However, a closer look at the numbers by earnings tells a different story.

KBH only saw one positive post-profit move in 2020, and that was a 2.5% drop in January. Overall, the stock has moved an average of 5.3% after earnings over the past eight quarters, regardless of direction.

KB Home stock is fresh from hitting a 14-year high of $ 47.37 yesterday March 17th. Stocks are up 244% year over year, with their 50-day moving average proving to be support in 2021. Despite its positive performance, it should find that its relative strength index (RSI) of 68 is on the cusp of “overbought” territory, indicating that a near-term decline may already have been on the cards.

KBH share chart

Even if profits are on the horizon, the stock’s short-term options are attractively valued. In particular, the stock’s Schaeffer volatility index (SVI) of 49% is only in the 5th percentile of its annual range, suggesting that short-term options are pricing in relatively low volatility expectations for KBH. And the good news for option buyers: The stock had no problem making big moves, according to Schaeffer’s Volatility Scorecard (SVS), which is a high 87 out of 100, suggesting that KBH has consistently exceeded the volatility expectations priced into its options over the past year.

Basically, the company has some promising numbers. KB Home shares are traded at a price-earnings-ratio of 15.12. Additionally, KBH has a price / earnings ratio of 8.60 which would undoubtedly make the company undervalued if it lived up to its expectations.

Nonetheless, taking into account the latest net profit growth, KB Home should continue to improve its quarterly results. Between fiscal 2018 and fiscal 2020, KBH increased its net income by approximately $ 126 million and increased its net income to $ 296 million. The company even posted net profits of $ 28 million in a year hit by the COVID-19 pandemic. However, KB Home saw a $ 400 million revenue decline in fiscal 2020. The company also has total debt of $ 1.79 billion and only a fraction of that amount in cash. Overall, however, KB Home stock appears to be a solid long-term investment. It doesn’t hurt either that KB Home stock offers a dividend yield of 1.33%.

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