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KB Home (KBH)
:KBH
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KB Home
(NYSE:KBH)75Outperform
Positive Factors
Stock Rating
Backlog visibility supports the upgrade of KB Home's stock rating from Sell to Neutral.
Negative Factors
Incentives and Flexibility
The gross margin percentage guide relies heavily on current incentives, leaving little room for flexibility and raising concerns among investors.
Revenue Guidance
KBH lowered its FY25 housing revenue guidance midpoint by 3%, due to softer demand that the company experienced.
KB Home (KBH) vs. S&P 500 (SPY)
Market Cap
$4.38B
Dividend Yield1.65%
Average Volume (3M)1.21M
Price to Earnings (P/E)7.2
Beta (1Y)1.53
Revenue Growth8.10%
EPS Growth20.03%
CountryUS
Employees2,384
SectorConsumer Cyclical
Sector Strength53
IndustryResidential Construction
Share Statistics
EPS (TTM)8.46
Shares Outstanding72,156,820
10 Day Avg. Volume1,038,008
30 Day Avg. Volume1,210,139
Financial Highlights & Ratios
PEG Ratio0.36
Price to Book (P/B)N/A
Price to Sales (P/S)0.63
Price to Cash Flow (P/CF)3.00
P/FCF Ratio3.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$76.45Price Target Upside23.41% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering10
KB Home Business Overview & Revenue Model
Company DescriptionKB Home engages in selling and building a variety of new homes. It builds various types of homes, including attached and detached single-family homes, townhomes and condominiums. It operates through the following segments: West Coast, Southwest, Central and Southeast. It offer homes in development communities, at urban in-fill locations and as part of mixed-use projects. The company was founded in 1957 and is headquartered in Los Angeles, CA.
How the Company Makes MoneyKB Home generates revenue primarily through the construction and sale of residential properties. The company operates a build-to-order business model, allowing customers to personalize various aspects of their homes, which enhances customer satisfaction and increases sales potential. Revenue streams for KB Home include the sale of single-family homes, townhomes, and condominiums. The company also benefits from strategic partnerships with suppliers and contractors to manage costs and optimize the construction process. Additionally, KB Home's focus on sustainable and energy-efficient building practices can attract environmentally conscious buyers, contributing to its revenue. The company's financial performance is influenced by factors such as housing market conditions, interest rates, and economic trends.
KB Home Financial Statement Overview
Summary
KB Home exhibits strong revenue growth and efficient cost management, reflected in its high Gross Profit Margin. The balance sheet is robust with a favorable Debt-to-Equity Ratio and strong equity base, enhancing financial stability. Cash flow metrics signal challenges, particularly in free cash flow growth, but overall cash conversion remains reasonable. Continued focus on profitability improvements and cash flow management will be key for future performance.Income Statement
KB Home has demonstrated strong growth with a Revenue Growth Rate of 8.1% from 2023 to 2024. The Gross Profit Margin is exceptionally high at 100%, indicating effective cost management. However, the Net Profit Margin of 9.5% suggests room for improvement in profitability efficiency. The EBIT Margin is healthy at 11%, reflecting solid operational performance.80
Positive
Balance Sheet
The company's Debt-to-Equity Ratio is 0.42, indicating a balanced use of debt and equity, which is relatively low risk. Return on Equity is strong at 16.1%, showcasing effective use of equity to generate profits. The Equity Ratio of 58.6% indicates a strong reliance on equity financing, which enhances financial stability.75
Positive
Cash Flow
The Free Cash Flow Growth Rate is negative, indicating a decrease in cash flow generated after capital expenditures. However, the Operating Cash Flow to Net Income Ratio of 0.55 suggests moderate efficiency in converting net income into cash. The Free Cash Flow to Net Income Ratio is 0.49, showing a reasonable conversion of income into cash flow, despite recent declines.70
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 6.93B | 6.41B | 6.90B | 5.72B | 4.18B | Gross Profit |
| 1.47B | 1.37B | 1.69B | 1.26B | 802.72M | EBIT |
| 763.91M | 718.74M | 1.04B | 661.34M | 316.47M | EBITDA |
| 822.89M | 778.95M | 1.10B | 723.99M | 392.44M | Net Income Common Stockholders |
| 655.02M | 590.18M | 816.67M | 564.75M | 296.24M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 597.97M | 727.34M | 328.52M | 290.76M | 681.19M | Total Assets |
| 6.94B | 6.65B | 6.65B | 5.84B | 5.36B | Total Debt |
| 1.71B | 1.72B | 2.35B | 1.69B | 1.75B | Net Debt |
| 1.11B | 989.09M | 2.02B | 1.39B | 1.07B | Total Liabilities |
| 2.88B | 2.84B | 2.99B | 2.82B | 2.69B | Stockholders Equity |
| 4.06B | 3.81B | 3.66B | 3.02B | 2.67B |
| Cash Flow | Free Cash Flow | |||
| 323.41M | 1.05B | 138.18M | -76.69M | 281.84M | Operating Cash Flow |
| 362.72M | 1.08B | 183.42M | -37.30M | 310.68M | Investing Cash Flow |
| -50.12M | -58.06M | -71.77M | -38.08M | -26.56M | Financing Cash Flow |
| -440.75M | -627.49M | -73.58M | -315.01M | -56.44M |
KB Home Technical Analysis
Negative
61.95
Price Trends
64.92
Negative
71.81
Negative
74.26
Negative
Market Momentum
-1.52
Positive
44.05
Neutral
36.12
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KBH, the sentiment is Negative. The current price of 61.95 is below the 20-day moving average (MA) of 62.96, below the 50-day MA of 64.92, and below the 200-day MA of 74.26, indicating a bearish trend. The MACD of -1.52 indicates Positive momentum. The RSI at 44.05 is Neutral, neither overbought nor oversold. The STOCH value of 36.12 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for KBH.
KB Home Risk Analysis
KB Home disclosed 10 risk factors in its most recent earnings report. KB Home reported the most risks in the “Production” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
KB Home Peers Comparison
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $39.68B | 8.90 | 19.35% | 1.11% | 2.12% | 1.63% | |
75 Outperform | $4.38B | 7.19 | 16.52% | 1.65% | 8.10% | 20.03% | |
74 Outperform | $20.83B | 7.00 | 27.40% | 0.80% | 11.74% | 25.66% | |
69 Neutral | $10.75B | 7.44 | 20.38% | 0.85% | 5.86% | 12.20% | |
67 Neutral | $31.26B | 8.30 | 14.30% | 1.68% | 3.47% | 4.22% | |
66 Neutral | $21.54B | 14.19 | 39.95% | ― | 10.81% | 10.16% | |
60 Neutral | $13.01B | 10.45 | 0.79% | 3.53% | 1.60% | -22.47% |
* Consumer Cyclical Sector Average
Performance Comparison
KBH
KB Home
61.95
-6.97
-10.11%
DHI
DR Horton
129.37
-24.52
-15.93%
LEN
Lennar
122.03
-33.89
-21.74%
NVR
NVR
7,387.79
-294.51
-3.83%
PHM
PulteGroup
105.97
-7.06
-6.25%
TOL
Toll Brothers
110.49
-8.78
-7.36%
KB Home Earnings Call Summary
Earnings Call Date: Jan 13, 2025 | % Change Since: -2.96% | Next Earnings Date: Mar 19, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted strong financial and operational performance in 2024, with significant returns to shareholders and improvements in build times. However, challenges from rising mortgage rates and economic uncertainties led to adjusted revenue guidance for 2025. The company is well-positioned for future growth but remains cautious due to market volatility.Highlights
Strong Financial Performance
Fourth quarter revenues reached $2 billion, a significant year-over-year increase driven by a 17% rise in deliveries. Earnings per diluted share grew 36% to $2.52. Total revenues for 2024 increased to roughly $7 billion.
Operational Efficiency Gains
Build times reduced by 28% year-over-year, allowing for quicker backlog conversion. The company opened 106 new communities and achieved the highest level of customer satisfaction in its history.
Return to Shareholders
KB Home returned nearly $120 million to shareholders in Q4, mainly through share repurchases. For 2024, a total of $350 million was returned, representing 6% of shares outstanding.
Solid Housing Market Factors
Strong employment and wage increases, along with demographic trends, continue to drive housing demand, particularly among millennials and Gen Z buyers.
Lowlights
Challenges from Rising Mortgage Rates
Affordability constraints due to increasing mortgage rates affected near-term demand, leading to missed internal sales goals.
Lowered Revenue Guidance
Due to market conditions and a slower start to 2025, the company lowered its housing revenue guidance for the year to $7.25 billion at the midpoint of its range.
Impact of Economic Factors
Volatility in mortgage interest rates and macroeconomic uncertainties, including upcoming elections, slowed sales pace below internal targets.
Community Count and Sellouts
Forecasted higher community sellouts leading to a flat community count throughout 2025, despite significant investments in land acquisition.
Company Guidance
During KB Home's fourth quarter 2024 earnings call, the company reported strong financial performance within its guided range, highlighting key metrics such as total revenues of $2 billion, a 17% increase in deliveries, and a 36% growth in earnings per diluted share to $2.52. The gross margin expanded to just under 21%, and operating income increased to 11.5%. KB Home returned nearly $120 million to shareholders, primarily through share repurchases. For the full year, the company delivered approximately 14,200 homes, raising total revenues to around $7 billion and diluted earnings to $8.45 per share. The book value expanded by 12%, and a higher return on equity was achieved, despite challenges from fluctuating mortgage rates. Looking forward, the company estimates housing revenues for 2025 in the range of $7.0 billion to $7.5 billion, with a focus on maintaining a balanced approach to growth and shareholder returns.KB Home Corporate Events
Executive/Board Changes
KB Home Sets 2024 Incentive Awards for Executives
Neutral
Jan 27, 2025
On January 23, 2025, KB Home’s board of directors determined the 2024 fiscal year incentive awards for eligible participants under the company’s annual incentive compensation program. The awards included payouts in cash and restricted stock, which will vest over three years starting January 25, 2026. Notably, Jeffery T. Mezger received a substantial incentive award, highlighting his key role in the company.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.