Intrinsic Value Kaufman & Broad S.A. (KOF.PA)

• Previous Close: €31.40
• Intrinsic Value: €16.25
• Upside potential: -48%

Stock Valuation Context

Business Model And Market Position

Kaufman & Broad S.A. is a leading French property developer specializing in residential and commercial real estate. The company operates across multiple segments, including single-family homes, apartments, offices, retail spaces, and logistics platforms. Its vertically integrated model—spanning design, development, construction, and sales—allows for cost efficiencies and streamlined project execution. Kaufman & Broad has established a strong market position in France, leveraging its long-standing brand reputation and localized expertise to cater to diverse housing and commercial needs. The company benefits from steady demand in France’s residential construction sector, supported by urbanization trends and government incentives for homeownership. Its focus on sustainable and energy-efficient buildings aligns with evolving regulatory standards and consumer preferences. While competition remains intense, Kaufman & Broad differentiates itself through integrated project delivery and a diversified portfolio that mitigates cyclical risks.

Revenue Profitability And Efficiency

In its latest fiscal year, Kaufman & Broad reported revenue of €1.08 billion, with net income of €44.97 million, reflecting a net margin of approximately 4.2%. Operating cash flow stood at €285.7 million, underscoring solid cash generation from core operations. Capital expenditures were modest at €5.1 million, indicating disciplined investment in growth while maintaining liquidity.

Earnings Power And Capital Efficiency

The company’s diluted EPS of €2.31 demonstrates its ability to translate top-line performance into shareholder returns. With a capital-light approach to development and efficient working capital management, Kaufman & Broad achieves robust cash conversion, supporting reinvestment and dividend distributions.

Balance Sheet And Financial Health

Kaufman & Broad maintains a strong balance sheet, with €502.9 million in cash and equivalents against total debt of €43 million, reflecting a conservative leverage profile. This liquidity position provides flexibility for strategic acquisitions or organic expansion without overextending financial commitments.

Growth Trends And Dividend Policy

The company has demonstrated resilience in a competitive market, with growth driven by demand for affordable housing and commercial spaces. Its dividend payout of €2.2 per share signals confidence in sustained cash flows, appealing to income-focused investors.

Valuation And Market Expectations

With a market capitalization of €645 million and a beta of 0.96, Kaufman & Broad trades in line with broader market volatility. Investors appear to price in steady, albeit moderate, growth given the cyclical nature of the construction sector.

Strategic Advantages And Outlook

Kaufman & Broad’s integrated model and focus on sustainability position it well for long-term growth. Regulatory tailwinds in energy-efficient housing and urban development could drive future demand, though macroeconomic headwinds may temper near-term momentum.

Sources

Company filings, Euronext Paris disclosures