KB Home (KBH) AI Stock Analysis

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KB Home

(NYSE:KBH)

63Neutral

KB Home's overall stock score reflects a mix of strengths and challenges. The company's strong profitability and solid balance sheet are offset by declining revenue and cash flow issues. Technical indicators suggest weak momentum, yet the stock's valuation appears attractive. The recent earnings call highlights both promising long-term prospects and immediate operational challenges.

Positive Factors

Operational Efficiency

Build times decreased 20% to 147 days, offering potential benefits in stabilizing BTO backlog.

Pricing Strategy

Recent adjustments in pricing have led to an improvement in net orders, aligning more closely with the targeted sales pace.

Negative Factors

Order Performance

Net orders were significantly down year-over-year and below forecast, leading to a lowered revenue outlook.

Revenue Guidance

KBH lowered its full year gross margin guidance due to base price adjustments affecting earnings.

KB Home (KBH) vs. S&P 500 (SPY)

Market Cap

$3.85B

Dividend Yield1.86%

Average Volume (3M)1.78M

Price to Earnings (P/E)6.5

Beta (1Y)0.95

Revenue Growth5.54%

EPS Growth11.12%

CountryUS

Employees2,384

SectorConsumer Cyclical

Sector Strength63

IndustryResidential Construction

Share Statistics

EPS (TTM)8.20

Shares Outstanding71,733,510

10 Day Avg. Volume1,442,179

30 Day Avg. Volume1,780,531

Financial Highlights & Ratios

PEG Ratio0.59

Price to Book (P/B)N/A

Price to Sales (P/S)0.62

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

$67.62

Price Target Upside25.92% Upside

Rating ConsensusHold

Number of Analyst Covering15

KB Home Business Overview & Revenue Model

Company DescriptionKB Home operates as a homebuilding company in the United States. It operates through four segments: West Coast, Southwest, Central, and Southeast. It builds and sells various homes, including attached and detached single-family residential homes, townhomes, and condominiums primarily for first-time, first move-up, second move-up, and active adult homebuyers. The company also offers financial services, such as insurance products and title services. It has operations in Arizona, California, Colorado, Florida, Nevada, North Carolina, Texas, and Washington. The company was formerly known as Kaufman and Broad Home Corporation and changed its name to KB Home in January 2001. KB Home was founded in 1957 and is headquartered in Los Angeles, California.

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 shows strong profitability and solid balance sheet management, with a gross profit margin of 21.0% and a stable equity ratio of 58.6%. However, challenges include a decrease in revenue growth rate by -1.1% and a significant decline of -112.7% in free cash flow growth, indicating potential cash flow challenges.

Income Statement

Positive

The income statement shows a strong gross profit margin of 21.0% for TTM, with EBIT and EBITDA margins at 10.8% and 11.5% respectively, indicating good operational efficiency. However, the net profit margin has slightly decreased to 9.1% from 9.5% in the previous annual report, and the revenue growth rate is negative at -1.1%, showing a decline in revenue compared to the previous year.

Balance Sheet

Positive

The balance sheet is stable with a solid equity ratio of 58.6%, indicating a strong balance between debt and equity. The debt-to-equity ratio is 0.44, showing manageable leverage. However, the return on equity has decreased to 15.3% from 16.1% in the previous year, which could imply reduced profitability relative to equity.

Cash Flow

Positive

The cash flow statement highlights a concerning decrease in free cash flow, with a significant decline of -112.7% in free cash flow growth. The operating cash flow to net income ratio is negative, suggesting cash flow challenges. Despite this, the company maintains a reasonable free cash flow to net income ratio over the longer term.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
6.85B	6.93B	6.41B	6.90B	5.72B	4.18B
	Gross Profit
1.44B	1.47B	1.37B	1.69B	1.26B	802.72M
	EBIT
740.40M	763.91M	718.74M	1.04B	661.34M	316.47M
	EBITDA
786.35M	822.89M	778.95M	1.10B	723.99M	392.44M
	Net Income Common Stockholders
625.91M	655.02M	590.18M	816.67M	564.75M	296.24M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
269.46M	597.97M	727.34M	328.52M	290.76M	681.19M
	Total Assets
6.98B	6.94B	6.65B	6.65B	5.84B	5.36B
	Total Debt
1.81B	1.71B	1.72B	2.35B	1.69B	1.75B
	Net Debt
1.55B	1.11B	989.09M	2.02B	1.39B	1.07B
	Total Liabilities
2.89B	2.88B	2.84B	2.99B	2.82B	2.69B
	Stockholders Equity
4.09B	4.06B	3.81B	3.66B	3.02B	2.67B
Cash Flow		Free Cash Flow
-41.19M	323.41M	1.05B	138.18M	-76.69M	281.84M
	Operating Cash Flow
-117.00K	362.72M	1.08B	183.42M	-37.30M	310.68M
	Investing Cash Flow
-48.19M	-50.12M	-58.06M	-71.77M	-38.08M	-26.56M
	Financing Cash Flow
-350.53M	-440.75M	-627.49M	-73.58M	-315.01M	-56.44M

KB Home Technical Analysis

Technical Analysis Sentiment

Negative

Last Price53.70

Price Trends

50DMA

58.57

Negative

100DMA

63.70

Negative

200DMA

72.20

Negative

Market Momentum

MACD

-1.80

Negative

RSI

45.00

Neutral

STOCH

67.54

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 53.7 is below the 20-day moving average (MA) of 53.97, below the 50-day MA of 58.57, and below the 200-day MA of 72.20, indicating a bearish trend. The MACD of -1.80 indicates Negative momentum. The RSI at 45.00 is Neutral, neither overbought nor oversold. The STOCH value of 67.54 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
GRBK	81 Outperform	$2.56B	6.82	26.08%	―	18.07%	36.74%
TPH	74 Outperform	$2.75B	6.75	13.28%	―	10.82%	19.34%
MHO	74 Outperform	$2.83B	5.58	19.02%	―	8.75%	8.39%
MTH	71 Outperform	$4.88B	6.88	14.58%	2.29%	-0.68%	-7.99%
KBH	63 Neutral	$3.85B	6.55	15.58%	1.86%	5.54%	11.12%
SKY	63 Neutral	$4.86B	29.92	11.18%	―	22.52%	-18.73%
Sector *	60 Neutral	$6.86B	11.61	3.16%	4.15%	2.41%	-21.45%

* Consumer Cyclical Sector Average

Performance Comparison

KBH

KB Home

53.70

-11.52

-17.66%

MHO

M/I Homes

105.57

-15.65

-12.91%

MTH

Meritage

67.95

-15.15

-18.23%

SKY

Champion Homes

84.81

7.35

9.49%

TPH

Tri Pointe

30.33

-7.45

-19.72%

GRBK

Green Brick Partners

57.54

1.28

2.28%

KB Home Earnings Call Summary

Earnings Call Date: Mar 24, 2025 | % Change Since: -13.09% | Next Earnings Date: Jun 18, 2025

Earnings Call Sentiment Neutral

While KB Home reported strong order numbers and improved several key metrics such as gross margin and community count, the call highlighted challenges including revised revenue guidance, a delivery shortfall, and a difficult sales environment in Florida. The sentiment is balanced with positive long-term outlooks and investments in land and community growth, but overshadowed by current operational challenges.

Highlights

Revenue and Earnings

KB Home reported total revenues of $1.4 billion and diluted earnings per share of $1.49 for the first quarter of fiscal 2025.

Improved Metrics

Gross margin held at 20.3% excluding inventory-related charges, above the midpoint of the guided range, and the book value per share increased to over $57, a 12% year-over-year increase.

Strong Net Orders

The company generated 2,772 net orders in the first quarter, and saw a meaningful improvement in net orders in the last two weeks of the quarter, continuing into the second quarter.

Community Count Growth

The average community count increased by 7% year over year, with plans to maintain roughly 250 to 260 active communities throughout the 2025 second and third quarters.

Investment in Land

Invested $920 million in land acquisition and development during the quarter, with a lot position increased by 41% to over 78,200 lots owned or controlled.

Efficient Build Times

Build times improved to 147 days, with built-to-order homes at 139 days, moving closer to the goal of 120 days from start to home completion.

Lowlights

Lowered Revenue Guidance

Revenue guidance for fiscal 2025 was lowered due to softer demand at the start of the spring selling season.

Delivery Shortfall

Delivered fewer homes than anticipated, approximately 225 homes short of the first quarter expectation, including a delay of 75 homes in Southern California.

Reduced Operating Income Margin

Operating income margin decreased to 9.2% from 10.8% in the prior year, with reduced guidance for the full year operating income margin.

Challenges in Florida

Florida was identified as the softest state in terms of sales demand, requiring significant pricing action to stimulate sales.

Increased Cancellation Rates

The monthly absorption pace per community dropped to 3.6 homes, compared to 4.6 in the previous year's first quarter.

Company Guidance

During the KB Home 2025 First Quarter Earnings Conference Call, the company provided guidance indicating a reduction in revenue expectations for fiscal 2025 due to a softer selling environment. The total revenues for the first quarter were $1.4 billion with a diluted earnings per share of $1.49. The company reported delivering fewer homes than anticipated, with a shortfall of approximately 225 homes, partly due to 75 delayed deliveries in Southern California affected by wildfires. The gross margin, excluding inventory-related charges, was 20.3%, with an SG&A ratio of 11%, resulting in an operating income margin of 9.3%. The company also highlighted an increase in book value per share to over $57, a 12% year-over-year increase. Net orders were 2,772, with an average community count in line with projections, and a monthly absorption pace of 3.6 homes. KB Home's backlog stood at over 4,400 homes valued at $2.2 billion, with improved build times of 147 days for built-to-order homes. The company anticipates maintaining 250 to 260 active communities throughout the second and third quarters of 2025 and ending the year with approximately 250 communities. The guidance for full-year revenues was revised to a range of $6.6 billion to $7 billion, and the overall average selling price projection was adjusted to between $480,000 and $495,000.

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.