Investors braced for a bumpy ride ahead of KB Home's (NYSE: KBH) earnings announcement as the company has wavered between beating and falling short of analyst predictions during the past fiscal year. The company will unveil its latest earnings on Wednesday, June 29. KB Home constructs and sells homes through its operating divisions across the United States under the name KB Home. It operates a homebuilding and financial services business serving homebuyers in markets nationwide.

What analysts say:

  • Buy, sell, or hold?: Analysts think investors should stand pat on KB Home with nine of 16 analysts rating it hold. Analysts don't like KB Home as much as Ryland Group overall. Five out of 12 analysts rate Ryland Group a buy compared to six of 16 for KB Home. Analysts still rate the stock a Hold, but they are a bit more wary about it compared to three months ago.
  • Revenue Forecasts: On average, analysts predict $254.4 million in revenue this quarter. That would represent a decline of 32% from the year-ago quarter.
  • Wall St. Earnings Expectations: The average analyst is estimating a loss of 32 cents per share. Estimates range from a loss of 56 cents to a loss of 17 cents.

What our community says:
 Most CAPS All Stars are skeptical of KBH's prospects, with 60.7% assigning it an "underperform" rating. The community is divided on the stock with 45.5% Fools awarding it an "outperform" rating and 54.6% an "underperform" rating. Fools are skeptical of KB Home and haven't been shy with their opinions lately, logging 629 posts in the past 30 days. KB Home's bearish CAPS rating of one out of five stars falls short of the Fool community sentiment.

Management:
 KB Home's income has fallen year over year by an average of 33%. Revenue has fallen in the past two quarters.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross and net margins over the past four quarters.

Quarter

Q1

Q4

Q3

Q2

Gross Margin

13.3%

19.5%

17.8%

18%

Net Margin

-58.2%

3.9%

-0.3%

-8.2%

One final thing: If you want to keep tabs on KB Home movements, and for more analysis on the company, make sure you add it to your Watchlist.

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