Actionable news
0
All posts from Actionable news
Actionable news in KBH: KB HOME,

KB Home: Time To Go Long

Summary

Despite impressive revenue growth and improving margins, KBH shares have dropped 15% this year and failed to capitalize on the housing recovery, but this is an opportunity in disguise.

Home prices increased in August and the trend will continue as housing starts and sales are rising at a faster pace than supply and completions, creating a tailwind for KBH.

KBH is well-placed to benefit from the housing deficit since it has grown its community count by 26% and is developing communities that were earlier earmarked for future development.

The consistent increase in KBH’s average sales price, order backlog, and improving product mix will allow the company to deliver a better performance in the long run.

Despite the positive vibes in the housing market and a lot of runway for growth going forward, KB Home (NYSE:KBH) shares have lost over 15% of their value. This is despite the fact that KB Home has delivered impressive growth in its financial performance that looks set to continue in the long run on the back of the opportunity available in the housing market. The decline in the company's stock price can be attributed to its weak margins in spite of growth in the top line, as shown below:

KBH Revenue (TTM) data by YCharts

However, KB Home is taking corrective steps to improve its margins and it has met with success on this front. Looking ahead, I believe that KB Home will...


More