Beazer Homes USA (BZH) versus KB Home (KBH) Critical Analysis
Beazer Homes USA (NYSE: BZH) and KB Home (NYSE:KBH) are both small-cap construction companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, earnings, analyst recommendations, institutional ownership, risk, profitability and dividends.
This is a summary of current recommendations and price targets for Beazer Homes USA and KB Home, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Beazer Homes USA||1||4||1||0||2.00|
Beazer Homes USA presently has a consensus target price of $15.13, suggesting a potential downside of 15.93%. KB Home has a consensus target price of $20.14, suggesting a potential downside of 5.34%. Given KB Home’s higher possible upside, analysts clearly believe KB Home is more favorable than Beazer Homes USA.
KB Home pays an annual dividend of $0.10 per share and has a dividend yield of 0.5%. Beazer Homes USA does not pay a dividend. KB Home pays out 7.7% of its earnings in the form of a dividend.
This table compares Beazer Homes USA and KB Home’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Beazer Homes USA||-0.14%||3.01%||0.88%|
Insider and Institutional Ownership
80.7% of Beazer Homes USA shares are held by institutional investors. Comparatively, 98.4% of KB Home shares are held by institutional investors. 7.6% of Beazer Homes USA shares are held by insiders. Comparatively, 8.6% of KB Home shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.
Risk & Volatility
Beazer Homes USA has a beta of 2.71, meaning that its stock price is 171% more volatile than the S&P 500. Comparatively, KB Home has a beta of 1.6, meaning that its stock price is 60% more volatile than the S&P 500.
Valuation & Earnings
This table compares Beazer Homes USA and KB Home’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Beazer Homes USA||$1.88 billion||0.31||$74.43 million||($0.08)||-224.85|
|KB Home||$3.93 billion||0.46||$243.37 million||$1.30||16.37|
KB Home has higher revenue and earnings than Beazer Homes USA. Beazer Homes USA is trading at a lower price-to-earnings ratio than KB Home, indicating that it is currently the more affordable of the two stocks.
KB Home beats Beazer Homes USA on 11 of the 14 factors compared between the two stocks.
Beazer Homes USA Company Profile
Beazer Homes USA, Inc. is a geographically diversified homebuilder. As of September 30, 2016, the Company had operations in 13 states within over three geographic regions in the United States. The Company’s segments include West, East and Southeast. The Company markets and sells its products through its Website, www.beazer.com; mobile site, m.beazer.com; real estate listing sites, online advertising, including search engine marketing and display advertising, social media, video, brochures, direct marketing and out-of-home advertising, including billboards and signage, as well as other activities. It offers lender choice and personalization. The Company’s Choice Plans allows buyers to choose living areas, such as the kitchen and master bathroom. Its West segment includes Arizona, California, Nevada and Texas. Its East segment includes Indiana, Maryland/Delaware, Tennessee and Virginia. Its Southeast segment includes Florida, Georgia, North Carolina and South Carolina.
KB Home Company Profile
KB HOME is a homebuilding company. The Company is engaged in selling and building a range of new homes designed primarily for first-time, move-up and active adult homebuyers, including attached and detached single-family residential homes. It operates through five segments, which consist of four homebuilding segments and one financial services segment. Its homebuilding segments include West Coast, Southwest, Central and Southeast. The homebuilding segments are engaged in the acquisition and development of land primarily for residential purposes. The financial services segment offers property and casualty insurance and, in certain instances, earthquake, flood and personal property insurance to its homebuyers in the same markets as its homebuilding segments, and provides title services in the majority of markets located within its Central and Southeast homebuilding segments. It offers homes in development communities, at urban in-fill locations and as part of mixed-use projects.
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