How Hedge Fund Analysts Expect KB Home To Report

KB Home (KBH), an American home building company is expected to report its earnings for FQ4’13 before the market opens on Thursday, December 19. Last week rival Toll Brothers (TOL) reported a much stronger than expected financial report beating the Wall Street consensus on EPS by 12c the revenue forecast by over $65 million. Yesterday another competitor, Lennar Corp. (LEN) also posted much stronger earnings than analysts were predicting. Tomorrow we will see if KB Home can follow suit because new home building has been healthy across the board or if their rivals’ success has been due to wrestling away market share.

The information below is derived from data submitted to the Estimize platform by a set of Buy Side and Independent analyst contributors.

The current Wall Street consensus expectation is for KBH to report 45c EPS and $675.34M revenue while the current Estimize consensus from 7 Buy Side and Independent contributing analysts is 45c EPS and $674.78M revenue. The magnitude of the difference between the Wall Street and Estimize consensus numbers often identifies opportunities to take advantage of expectations that may not have been priced into the market. In this case, we’re seeing a very small differential between the Estimize and Wall Street numbers.

Over the past four months the Wall Street consensus trend for EPS has increased from 35c to 40c while the revenue expectation has also gone up from $648.28M to $675.34M. The Estimize EPS consensus ended where it began at 45c and the revenue expectation increased from $673.34M to $674.48M.

Over the previous 4 quarters for which there is sufficient data, Estimize has been more accurate in forecasting EPS and revenue 3 times each. By tapping into a wider range of contributors including hedge-fund analysts, asset managers, students, and non professionals we have built a data set that is up to 69.5% more accurate than Wall Street, but more importantly it does a better job of representing the market’s true expectations.

Confidence ratings for each user are calculated through algorithms developed by our deep quantitative research which look at correlations between analyst track records and tendencies as they relate to future accuracy. We believe that everyone’s opinion matters, regardless of who they are, where they’re from, or what it says on their business card.

The distribution of estimates published by analysts on Estimize range from 40c to 48c EPS and $665.00M to $688.50M in revenues. This quarter our contributing analysts are expecting KB Home Corp. to beat report in line with Wall Street on EPS but come up slightly short on revenue. The range of the distribution of estimates on our platform is about average compared with previous quarters. The size of the distribution of estimates relative to previous quarters often signals whether or not the market is confident that it has priced in the expected earnings already. A greater distribution signaling the potential for more volatility post earnings, a smaller vice versa.

The analyst with the highest estimate confidence rating this quarter is shaneleonard121 who projects 48c EPS and $672.07M in revenue. In this case the analyst with the top confidence rating, who is ranked 55th overall among over 3,300 contributing analysts, is expecting more profit per share but less revenue than both Estimize and Wall Street.

This quarter there is only a small discrepancy between the expectations of buy side and independent analysts and Wall Street. Both groups are projecting 45c EPS but the consensus from Estimize is expecting KB Home Corp. to fall slightly short of the mark on revenue.