KB Homes – still no margin of safety despite declining by 17 % since Aug 2023
KB Homes (KBH) is a mid-sized US homebuilder with a concentrated geographical coverage. Its homebuilding operations span only 9 states.
I last looked KBH in Aug when it was trading at USD 54 per share. It has gone down to USD 45 per share today (15 Oct 2023).
In Aug, I had concluded that there was no margin of safety based on its EPV. At the current market price, there is still no margin of safety
From a fundamental perspective, KBH has not achieved any revenue growth over the past 18 years and has poor financial position and low returns.
Its revenue shrank from 2005 to 2022.
It incurred losses from 2007 to 2012.
It did poorly on 2 of the financial metrics – cash on hand and Debt Equity ratio.
It has not been able to achieve a return over the cycle that is greater than the cost of funds.
It has not been able to deliver the asset efficiency part of its KB Edge strategy. There was no improvement in gross profitability and asset turnover.
For more insights into US homebuilders go to “My 43 Non-Bursa stocks that can make money” at https://www.i4value.asia/2021/03/are-these-outstanding-stocks-what-to.html#more
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KBH is a $10 stock at best. Even in the best case scenario, KBH cannot hold $25-.
KB home investors snookered 🎱 by wall st crooks who hyped this incessantly luring naive retailers out of their money 💰
In a deflationary scenario, quite plausible at this moment, very few can finance a home at any interest rate. Bearish
8% mortgage, home sales will collapse, sell, sell, sell.
Too cheap under 50 !!