Stocks to Avoid #3: KB Home (KBH)
While the home construction industry continues to heal as a whole, it’s still a somewhat uneven recovery. The far-western part of the United States, for instance, isn’t experiencing the same real estate rebound most of the rest of the country is enjoying.
That’s taking a direct toll on KB Home (KBH), which posted surprisingly disappointing Q3 results. Its per share profit of 31 cents was well shy of the expected 45 cents, and revenue was more than 6% shy of forecasts.
To be fair, the year-over-year comparisons of the top and bottom line were positive last quarter. A stock’s value is largely dictated by expectations, however, and now the market realizes it might have been expecting too much from KB Home. That could prove to be a drag on KBH stock for several months.