Earnings Beat: KB Home Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models
The third-quarter results for KB Home (NYSE:KBH) were released last week, making it a good time to revisit its performance. Revenues were US$1.3b, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of US$1.05 were also better than expected, beating analyst predictions by 17%. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on KB Home after the latest results.
Taking into account the latest results, KB Home's twelve analysts currently expect revenues in 2027 to be US$5.17b, approximately in line with the last 12 months. Per-share earnings are expected to accumulate 2.4% to US$3.79. Before this earnings report, the analysts had been forecasting revenues of US$5.50b and earnings per share (EPS) of US$4.48 in 2027. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a real cut to earnings per share estimates.
See our latest analysis for KB Home
Despite the cuts to forecast earnings, there was no real change to the US$55.58 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic KB Home analyst has a price target of US$70.00 per share, while the most pessimistic values it at US$43.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would also point out that the forecast 0.2% annualised revenue decline to the end of 2027 is better than the historical trend, which saw revenues shrink 0.4% annually over the past five years Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 6.6% annually. So it's pretty clear that, while it does have declining revenues, the analysts also expect KB Home to suffer worse than the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for KB Home. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target held steady at US$55.58, with the latest estimates not enough to have an impact on their price targets.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for KB Home going out to 2028, and you can see them free on our platform here..
And what about risks? Every company has them, and we've spotted 3 warning signs for KB Home (of which 1 is potentially serious!) you should know about.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.