KBH - Embedded Expectations Analysis - 2021 03 10
KB Home (KBH:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) earnings, with a 9.6x Uniform P/E. At these levels, the market has bearish expectations for the firm, and management may be concerned about sustaining margin improvements, their owned lot supply, and pricing headwindsSpecifically, management may lack confidence in their ability to continue to improve margins and scale, lock-in vendor and supplier costs, and create affordable product offerings that match median household income levels. Furthermore, they may have concerns about pricing headwinds and the adequacy of their owned lot supply, given the sizable increase in delivery volume anticipated for 2021
KB Home is a homebuilding company. The company builds a variety of homes designed primarily for first-time and first move-up, as well as second move-up and active adult homebuyers, including attached and detached single-family residential homes, townhomes and condominiums. The company's financial services operations provide various insurance products to its homebuyers in the markets where it builds homes and provide title services in certain of those markets. The company's financial services operations also provide mortgage banking services, including residential consumer mortgage loan originations, to its homebuyers indirectly through KBHS Home Loans, LLC, a joint venture the company formed with Stearns Lending, LLC.
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