Another homebuilding stock trending positive over the last month is KB Home (NYSE:KBH), but the gains haven’t been easy to come by. The stock has been incredibly volatile during that time. On Thursday it dropped more than 8%. Even so, KB Home shares are up nearly 30% since late September.
The reason for those gains is directly related to its most recent earnings report released on Sept. 23. KB Home posted a loss that was smaller than Wall Street expectations. The results are certainly encouraging, but KB Home is still on the wrong side of the profit track.
Wall Street is looking for it to lose $2.48 per share in the current fiscal year ending Nov. 30. The estimate is for the loss to shrink to 20 cents per share in the following year. Book value is getting smaller. With recent gains in the stock, shares trade for 1.35 times book value.
Earnings performance against estimates has been mixed over the last four quarters. Before the strong last quarter, the company missed Wall Street expectations badly. There’s an equal chance KB Home will miss estimates again.
I would not want to pay more than 1 times book value for this stock. Look for shares to retreat to those levels as investors lock in profits.