KB Home Stock Wobbly Ahead of Earnings

KBH has a mixed history of post-earnings moves

Deputy Editor
Jun 18, 2020 at 1:59 PM
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The shares of KB Home (NYSE:KBH) are down 1.6%, to trade at $33.25 this afternoon, ahead of the homebuilding company's fiscal second-quarter earnings report,due out after the market closes next Wednesday, June 24. Below, we'll dig into how KBH has fared in the past post-earnings, and see what moves the options market is pricing in for the shares. 

Today's fall puts KB Home stock below its 20-day moving average, a trendline that prior to today had only been breached twice on a closing basis in the last three months. The equity has been facing off with its year-to-date breakeven level as well, and boasts a 170% gain in the last three months.

KBH Chart June 18

KBH puts control the tempo in the options pits amid limited absolute volume. The stock's 50-day put/call volume ratio of 1.07 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) is in the elevated 85th percentile of its annual range suggesting a healthier-than-usual appetite for long puts of late.

Analysts are also on the fence. Of the 13 brokerages in coverage, eight sport a tepid "hold" or worse rating. Meanwhile, the security’s consensus 12-month price target of $32.57 is a thin 2.2% discount to current levels. 

The homebuilding stock has a mixed bag of post-earnings reactions. Four of the last eight post-earnings moves have been to the downside, including a 5.9% drop last March. Over the past two years the stock has averaged a swing of 4.5%, regardless of direction, and this time around, the options pits are pricing in a much higher, 10.9% shift.

 

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