On Thursday, Keefe, Bruyette & Woods adjusted their price target for KB Home (NYSE:KBH) shares, increasing it to $74 from the previous $67, while retaining a Market Perform rating. The revision follows the homebuilder's first-quarter earnings for fiscal year 2024, which showcased a 12% rise in earnings per share (EPS).
This increase was attributed to a combination of higher deliveries, improved margins, a reduced share count, and financial services performance, although it was partially offset by elevated selling, general, and administrative expenses (SG&A).
The firm's analysis revealed that orders surged by 55% year-over-year in the first quarter, with management indicating a robust sales pace continuing into the second quarter. The analyst noted a modest enhancement in estimates, ranging between 0.5% and 1.7%, which was based on a 0.5% increase in deliveries and a 0.4% decrease in the share count.
KB Home's stock currently trades at 1.35 times its current book value and 1.2 times its forward book value. These valuations are considered relatively attractive when compared to its mid-cap peers in the industry.
The homebuilder's financial results and the subsequent price target raise reflect the company's ability to navigate the market effectively, as evidenced by the strong order trends. The maintained Market Perform rating suggests that while the analyst sees potential in KB Home, it is weighed against a broader preference for larger companies in the home construction industry.
InvestingPro Insights
As KB Home (NYSE:KBH) continues to navigate the market with robust sales and financial performance, there are key metrics and insights from InvestingPro that could further inform investors about the company's current standing. With a market capitalization of $5.26 billion and a compelling P/E ratio of 9.08, KB Home presents a value proposition that is hard to overlook. The adjusted P/E ratio for the last twelve months as of Q1 2024 further underscores this, coming in at an even more attractive 8.7.
InvestingPro Tips suggest that management's aggressive share buybacks and the high shareholder yield are strategic moves that have likely contributed to the company's strong financial health. Additionally, the fact that 8 analysts have revised their earnings upwards for the upcoming period signals a positive outlook on the company's future performance. Notably, KB Home has also maintained dividend payments for an impressive 39 consecutive years, which provides an added layer of investor confidence regarding the company's stability and commitment to shareholder returns.
For investors looking for further in-depth analysis and additional InvestingPro Tips, there are 14 more available for KB Home. These insights can be accessed through InvestingPro, and by using the coupon code PRONEWS24, investors can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. This offer provides a valuable opportunity to gain a comprehensive understanding of KB Home's financial position and potential investment opportunities.
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