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KB Home (KBH)
NYSE:KBH
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KB Home (KBH) AI Stock Analysis

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KBH

KB Home

(NYSE:KBH)

Rating:73Outperform
Price Target:
$66.00
▲(16.07%Upside)
KB Home's stock is positioned moderately well due to a strong valuation and favorable technical indicators. While the company's financial performance is solid, concerns about revenue growth and cash flow generation are notable. The mixed sentiment from the earnings call reflects both achievements and challenges, impacting the overall score.
Positive Factors
Construction Costs
Homebuilding gross margin percentage at 19.7% topped the guide, indicating favorable construction costs.
Pricing Strategy
Sales trends have rebounded to 1+/week/store after KBH cut base prices.
Share Repurchase
KBH has increased its share repurchase guidance, indicating a focus on returning value to shareholders.
Negative Factors
Operating Backdrop
The outlook could be tricky, with a freshly lower guide implying a sharp step-up in FQ4 backlog conversion, but not a slam dunk in a tough operating backdrop.
Order Performance
Orders at 3,460 missed expectations, suggesting a lagging pace compared to earlier quarter momentum.
Revenue Outlook
KBH lowered its full year guidance to reflect a weaker revenue and margin outlook, which was partially offset by more share repurchases.

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

KB Home Business Overview & Revenue Model

Company DescriptionKB Home (KBH) is one of the largest and most recognized homebuilding companies in the United States. Founded in 1957 and headquartered in Los Angeles, California, KB Home specializes in building a variety of new homes designed primarily for first-time and move-up homebuyers. The company operates in several key markets across the country, including California, Texas, Arizona, and Nevada. KB Home is known for its distinctive Built to Order™ approach, which allows homebuyers to customize their homes according to their preferences and budgets.
How the Company Makes MoneyKB Home generates revenue primarily through the design, construction, and sale of single-family homes. The company's revenue model is centered around its core business of homebuilding, where it acquires land, develops residential communities, and sells completed homes to buyers. A significant portion of KB Home's earnings comes from the sale of these homes, with additional revenue streams from financial services related to home sales, such as mortgage banking services provided through partnerships with third-party mortgage companies. The company's strategic focus on energy-efficient and customizable homes adds value and appeal to potential buyers. Additionally, KB Home's partnerships with material suppliers and subcontractors help manage costs and maintain profitability.

KB Home Earnings Call Summary

Earnings Call Date:Jun 23, 2025
(Q2-2025)
|
% Change Since: 6.64%|
Next Earnings Date:Sep 17, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed picture. While KB Home reported strong financial results, improved build times, and significant cash returns to shareholders, it also faced challenges with subdued demand, revised guidance, and municipal delays impacting community openings. The overall sentiment is neutral, as highlights and lowlights are balanced.
Q2-2025 Updates
Positive Updates
Solid Financial Results
KB Home delivered solid financial results in the second quarter, meeting or exceeding guidance ranges. Total revenues amounted to $1.5 billion, and diluted earnings per share reached $1.50. The company achieved a gross margin of 19.7%, excluding inventory-related charges, which was above the guidance range.
Improved Build Times
Build times improved sequentially by 7 days to 140 days, returning to pre-pandemic levels. For build-to-order homes, build times are currently 132 days, moving closer to the goal of 120 days.
Increased Book Value per Share
The book value per share increased to nearly $59, a 10% year-over-year increase.
Strong Cash Returns to Shareholders
KB Home repurchased $200 million of shares in the second quarter and returned just under $290 million in cash to shareholders in the first half of 2025, including share repurchases and dividends.
Negative Updates
Revised Guidance for Fiscal 2025
Due to softer market conditions, KB Home revised its guidance for fiscal 2025, expecting lower top-line revenue, which is projected between $6.3 billion and $6.5 billion.
Subdued Demand and Affordability Challenges
The housing market faced subdued demand during the spring selling season, influenced by affordability challenges, elevated mortgage interest rates, and macroeconomic and geopolitical uncertainties.
Decline in Net Orders
Net orders declined in April and May, not following the typical spring trajectory. Monthly absorption pace per community was 4.5 net orders compared to 5.5 in the previous year's second quarter.
Municipal Delays Impacting Community Openings
Municipal delays impacted the timing of community openings, shifting some grand openings to later in the second quarter or into the third quarter.
Lower Backlog Year-over-Year
Backlog at the end of May was 4,776 homes valued at $2.3 billion, lower year-over-year, although build times have improved.
Company Guidance
During the KB Home 2025 Second Quarter Earnings Conference Call, the company provided guidance on several key financial metrics. For fiscal 2025, KB Home revised its revenue expectation to between $6.3 billion and $6.5 billion, adjusting from previous projections due to a softer market environment. The company anticipates third-quarter housing revenues between $1.5 billion and $1.7 billion, with an average selling price expected to range from $470,000 to $480,000. For the full year, the average selling price is projected to be between $480,000 and $490,000. Additionally, the adjusted housing gross profit margin is expected to be between 18.1% and 18.7% for the third quarter, and between 19% and 19.4% for the full year. The company also plans to repurchase between $100 million and $200 million of its shares in the third quarter, continuing its capital allocation strategy amidst ongoing market conditions.

KB Home Financial Statement Overview

Summary
KB Home has a solid financial position with strong profitability and a stable balance sheet. The gross profit margin is robust at 20.5%, and the net profit margin is healthy at 8.5%. However, challenges include a slight decline in revenue growth (-3.7%) and significant decreases in cash flow, particularly free cash flow down by 80%.
Income Statement
75
Positive
KB Home's income statement shows a robust gross profit margin of 20.5% in TTM, reflecting strong operational efficiency. The net profit margin stands at 8.5%, indicating healthy profitability. However, revenue growth has been slightly negative at -3.7% over the last year, raising concerns about future growth potential. EBIT and EBITDA margins are solid at 10.1% and 9.8%, respectively, underscoring efficient cost management.
Balance Sheet
70
Positive
The balance sheet is strong with an equity ratio of 56.9%, suggesting a stable financial structure. The debt-to-equity ratio is manageable at 0.47, indicating a prudent use of debt. Return on equity is healthy at 14.2%, showcasing the company's ability to generate returns on shareholder investments. However, slight increases in debt levels warrant caution.
Cash Flow
60
Neutral
Cash flow analysis reveals challenges with a significant decrease in free cash flow by 80% over the year, marking potential liquidity risks. The operating cash flow to net income ratio is low at 0.19, suggesting weaker cash generation relative to reported earnings. Nonetheless, free cash flow to net income remains positive at 0.11, indicating some level of cash return from operations.
BreakdownDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue6.93B6.41B6.90B5.72B4.18B
Gross Profit1.47B1.37B1.69B1.26B802.72M
EBITDA822.89M778.95M1.10B723.99M392.44M
Net Income655.02M590.18M816.67M564.75M296.24M
Balance Sheet
Total Assets6.94B6.65B6.65B5.84B5.36B
Cash, Cash Equivalents and Short-Term Investments599.19M727.34M330.20M290.76M681.19M
Total Debt1.71B1.72B1.87B1.71B1.78B
Total Liabilities2.88B2.84B2.99B2.82B2.69B
Stockholders Equity4.06B3.81B3.66B3.02B2.67B
Cash Flow
Free Cash Flow323.41M1.05B138.18M-76.69M281.84M
Operating Cash Flow362.72M1.08B183.42M-37.30M310.68M
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

Technical Analysis Sentiment
Positive
Last Price56.86
Price Trends
50DMA
53.59
Positive
100DMA
55.00
Positive
200DMA
63.43
Negative
Market Momentum
MACD
1.00
Negative
RSI
56.11
Neutral
STOCH
65.28
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KBH, the sentiment is Positive. The current price of 56.86 is above the 20-day moving average (MA) of 55.17, above the 50-day MA of 53.59, and below the 200-day MA of 63.43, indicating a neutral trend. The MACD of 1.00 indicates Negative momentum. The RSI at 56.11 is Neutral, neither overbought nor oversold. The STOCH value of 65.28 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 (62)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
81
Outperform
$2.76B8.0511.38%-3.59%-10.82%
79
Outperform
$2.91B7.9824.29%21.22%24.90%
78
Outperform
$3.27B6.7117.56%7.39%-1.37%
74
Outperform
$3.73B19.0413.38%22.65%34.77%
73
Outperform
$3.87B7.5314.07%1.76%3.65%-0.61%
72
Outperform
$5.01B7.9612.58%2.31%-3.72%-23.00%
62
Neutral
C$5.28B8.2720.23%3.15%3.09%8.49%
* Consumer Cyclical Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
KBH
KB Home
56.86
-26.92
-32.13%
MHO
M/I Homes
122.19
-44.48
-26.69%
MTH
Meritage
69.77
-29.17
-29.48%
SKY
Champion Homes
65.06
-17.07
-20.78%
TPH
Tri Pointe
31.59
-14.44
-31.37%
GRBK
Green Brick Partners
66.15
-7.19
-9.80%

KB Home Corporate Events

Executive/Board ChangesBusiness Operations and Strategy
KB Home Boosts Executive Salaries Amid Talent Retention
Neutral
Jul 15, 2025

On July 10, 2025, KB Home‘s board of directors approved increases to the base salaries of certain executive officers, effective July 1, 2025. This decision reflects the company’s commitment to retaining top talent and may impact its operational costs and compensation structure.

The most recent analyst rating on (KBH) stock is a Hold with a $86.00 price target. To see the full list of analyst forecasts on KB Home stock, see the KBH Stock Forecast page.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.Date of analysis: Jul 23, 2025