Bear of the Day: KB Homes (KBH)

Markets are trying to digest the new American order of tariffs across the globe. It’s led to some stocks getting absolutely demolished, while others actually stand to gain. There are some areas of the market that had been grappling with economic headwinds well before these tariffs were announced. One stock that’s wrestling with these headwinds is today’s Bear of the Day, KB Home (KBH).

KB Home operates as a homebuilding company in the United States.It builds and sells a variety of homes, including attached and detached single-family residential homes, townhomes, and condominiums primarily for first-time, first move-up, second move-up, and active adult homebuyers. 

Over the course of last thirty days, four analysts have cut their earnings estimates for the current year and next year. That bearish behavior is the reason that the stock is currently a Zacks Rank #5 (Strong Sell). It’s also caused our Zacks Consensus Estimate to come down from $9.02 to $7.61 for the current year. Next year’s number has come down from $10.70 to $8.17. That means that current year earnings are set to contract by 9.94%. That’s on a flat revenue number of $6.93 billion this year.

CEO Jeffrey Mezger attributed the downturn to consumers grappling with affordability concerns and uncertainties related to macroeconomic and geopolitical issues, resulting in a more cautious approach to homebuying decisions. This hesitancy was evident during the typically robust spring selling season, which saw muted demand despite healthy traffic in KB Home communities.

KB Home is in the Building Products – Home Buildings industry which ranks in the Bottom 17% of our Zacks Industry Rank. There are two stocks which are in the good graces of our Zacks Rank in this industry. That includes Zacks Rank #2 (Buy) stocks Dream Finders Homes (DFH) and Persimmon (PSMMY).

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This article originally published on Zacks Investment Research (zacks.com).

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