Kb Home Stock Fair Value Calculation – Federated Hermes Cuts KB Home Stake by Over 50% in 2nd Quarter
September 20, 2024
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KB ($NYSE:KBH) Home is a well-known homebuilding company that focuses on constructing and selling single-family homes in the United States. Its stock is listed on the New York Stock Exchange under the ticker symbol “KBH.” According to the 13F filing submitted to the Securities and Exchange Commission (SEC), Federated Hermes Inc. sold off 50.2% of its shares in KB Home during this period. This move by Federated Hermes Inc. is significant considering the company’s position as one of the largest shareholders of KB Home. This information is made available to the public and can provide insights into the investment decisions of these firms.
These factors may have influenced Federated Hermes Inc.’s decision to reduce its exposure to KB Home. Regardless of the reason behind it, this move by Federated Hermes Inc. could potentially impact KB Home’s stock performance in the short term. Investors will be keeping a close eye on the company’s next quarterly earnings report to see the impact of this change in shareholding. It will also be interesting to see if other investment firms follow suit and reduce their stakes in KB Home.
Analysis – Kb Home Stock Fair Value Calculation
As an analyst at GoodWhale, I have carefully reviewed the financials of KB HOME. Our analysis reveals that the intrinsic value of KB HOME share is approximately $49.1. This value is calculated using our proprietary Valuation Line, which takes into account various factors such as the company’s earnings, growth potential, and industry trends. However, currently KB HOME’s stock is trading at $89.63 which indicates that it is overvalued by a significant margin of 82.7%. This means that the current market price of KB HOME stock is much higher than its true worth as determined by our valuation model. One possible explanation for this overvaluation could be the strong performance of the housing market in recent years. KB HOME, being a major player in the housing construction industry, has benefited from this trend and has reported strong financial results. This may have led investors to drive up the stock price in anticipation of future growth and profits. However, it is important to note that overvalued stocks are not sustainable in the long term. Eventually, market forces will correct this imbalance and bring the stock price closer to its intrinsic value. For investors, this means that buying KB HOME stock at its current price may not be a wise decision as they may not see significant returns in the future. In conclusion, our analysis suggests that KB HOME is currently overvalued and its stock price may not accurately reflect its true value. We recommend caution when considering investing in this stock and advise investors to carefully monitor market trends and company performance before making any investment decisions. More…
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for Kb Home. More…
| Total Revenues | Net Income | Net Margin |
| 6.41k | 590.18 | 9.2% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for Kb Home. More…
| Operations | Investing | Financing |
| 1.18k | -71.77 | -73.58 |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for Kb Home. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 6.65k | 2.84k | 50.46 |
Key Ratios Snapshot
Some of the financial key ratios for Kb Home are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| 15.3% | 31.3% | 12.0% |
| FCF Margin | ROE | ROA |
| 17.8% | 12.6% | 7.3% |
Peers
In the homebuilding industry, KB Home competes against other large builders such as Hovnanian Enterprises Inc, Beazer Homes USA Inc, and Simonds Group Ltd. These companies compete for market share in the new home construction market by offering a variety of home types and price points to appeal to different segments of the population.
– Hovnanian Enterprises Inc ($NYSE:HOV)
Hovnanian Enterprises Inc is a homebuilding company that specializes in the construction and sale of single-family detached homes, attached homes, and condominiums in the United States. As of 2022, the company had a market capitalization of 299.28 million and a return on equity of 74.13%. The company was founded in 1959 and is headquartered in Red Bank, New Jersey.
– Beazer Homes USA Inc ($NYSE:BZH)
Beazer Homes USA Inc is a homebuilder that operates in the United States. The company has a market capitalization of $400.82 million and a return on equity of 15.8%. Beazer Homes builds and sells single-family homes, townhomes, and condominiums. The company operates in Arizona, California, Delaware, Florida, Georgia, Indiana, Maryland, Nevada, North Carolina, South Carolina, Tennessee, Texas, and Virginia.
– Simonds Group Ltd ($ASX:SIO)
Simonds Group Ltd is a holding company that operates through its subsidiaries. The company’s businesses include investment holding, property development and investment, and food and beverage. Simonds Group Ltd was founded in Simonds, Australia in 1881.
Summary
Federated Hermes Inc. has reduced its stake in KB Home by half in the 2nd quarter, as seen in their recent 13F filing. This move suggests a lack of confidence in the company’s future prospects.
However, the stock price did see a rise on the day of this filing, indicating potential short-term gains. Overall, this highlights the uncertainty surrounding KB Home and the need for careful analysis before making any investment decisions. Investors should closely monitor the company’s performance and financials to gain a better understanding of its long-term potential and make informed investment choices.
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