KB Home (KBH) is about to show us what the housing market really looks like right now. The homebuilder reports fourth-quarter earnings Thursday after the closing bell, and Wall Street isn't expecting good news.
Analysts are projecting earnings of $1.79 per share for the Los Angeles-based company, which represents a meaningful drop from the $2.52 per share it posted in the same quarter last year. Revenue estimates tell a similar story: the consensus sits at $1.66 billion, down from $2 billion a year earlier, according to market data.
The stock closed Wednesday at $62.94, down 1.5% for the session, as investors positioned themselves ahead of the results.
KB Home did throw shareholders a bone back in October, announcing a new $1 billion share repurchase authorization. That's the kind of move companies make when they believe their stock is undervalued, and it signals management's confidence even as near-term results look softer.
What the Smart Money Is Saying
Looking at recent moves from the most accurate analysts covering KB Home, the picture is decidedly mixed. These forecasters have track records ranging from 66% to 69% accuracy, so their views carry weight.
Barclays analyst Matthew Bouley turned bullish in early December, upgrading the stock from Equal-Weight to Overweight and boosting his price target from $49 to $71. That's a substantial vote of confidence. Bouley maintains a 66% accuracy rate on his calls.
On the flip side, several analysts have been trimming expectations. B of A Securities analyst Rafe Jadrosich kept his Neutral rating but lowered his target from $67 to $62 in October. He also carries a 66% accuracy rating.
Evercore ISI Group's Stephen Kim went further, downgrading KB Home from Outperform to In-Line in early October while slashing his price target from $73 to $65. Another 66% accuracy rate there.
JP Morgan's Michael Rehaut, who boasts the highest accuracy rate in this group at 69%, maintained his Neutral stance but cut his target from $63 to $53 in late September. That's the most conservative target among these top analysts.
Not everyone is backing away, though. Raymond James analyst Buck Horne kept his Outperform rating and actually raised his price target from $65 to $72 in late September, showing that some analysts still see upside potential. Horne's accuracy rate sits at 67%.
The spread between the most bullish and most bearish price targets here is substantial, ranging from $53 to $72. That tells you something: analysts are genuinely divided on where this stock is headed, even as they agree that this quarter's results will be weaker than last year.
