Will KB Home (NYSE:KBH) current volatility spike continue?
 | By Ellen Johnson | Macroaxis Story |
KB Home is generating negative expected returns assuming volatility of 3.1753% on return distribution over 60 days investment horizon. While some risk-loving traders are indifferent towards current market volatility, it is reasonable to concentrate on the risk of investing in KB Home. We will evaluate if KB Home's current volatility will continue into February.
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Reviewed by Michael Smolkin
KB Home has 1.78 B in debt with debt to equity (D/E) ratio of 0.69, which is OK given its current industry classification. The entity has a current ratio of 6.16, demonstrating that it is liquid and is capable to disburse its financial commitments when the payables are due. Volatility is a rate at which the price of KB Home or any other equity instrument increases or decreases for a given set of returns. It is measured by calculating the standard deviation of the annualized returns over a given period of time and shows the range to which the price of KB Home may increase or decrease. In other words, similar to KBH's beta indicator, it measures the risk of KB Home and helps estimate the fluctuations that may happen in a short period of time. So if prices of KB Home fluctuate rapidly in a short time span, it is termed to have high volatility, and if it swings slowly in a more extended period, it is understood to have low volatility. Please read more on our technical analysis page.
How important is KB Home's Liquidity
KB Home financial leverage refers to using borrowed capital as a funding source to finance KB Home ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. KB Home financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Financial leverage can amplify the potential profits to KB Home's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of KB Home's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets). Please check the breakdown between KB Home's total debt and its cash.
KB Home Gross Profit
KB Home Gross Profit growth is one of the most critical measures in evaluating the company. The Gross Profit growth rate is calculated simply by comparing KB Home previous period's values with its current period's values. Each time period you're measuring should be of equal lengths the increase or decrease, in a company's Gross Profit between two periods. Here we show KB Home Gross Profit growth over the last 10 years. Please check KB Home's gross profit and other fundamental indicators for more details.
KB Home Volatility Drivers
KB Home unsystematic risk is unique to KB Home and usually not directly affected by the market or economic environment. An example of unsystematic risk is the possibility of poor earnings or a layoff due to coronavirus. One may mitigate nonsystematic risk by buying different securities in the same industry or by buying in different sectors. For example, if you have a position in KB Home you can also buy Toll Brothers. You can also mitigate this risk by investing in the consumer discretionary sector as well as in companies having nothing to do with it. This type of risk is also called diversifiable risk and can be understood from analyzing KB Home important indicators over time. Here we run a correlation analysis between relevant fundamental ratios over at least ten year period to find a relationship in the way they react to changes in KB Home income statement and balance sheet. Here are more details about KBH volatility.Click cells to compare fundamentals
Breaking down KB Home Further
The firm reported the last year's revenue of 4.55 B. Total Income to common stockholders was 311.59 M with profit before taxes, overhead, and interest of 869.01 M.
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