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KB Home (KBH)
NYSE:KBH
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KB Home
(NYSE:KBH)
Rating:68Neutral
Price Target:
$58.00
▲(7.11%Upside)
Positive Factors
Construction costs
Homebuilding gross margin percentage at 19.7% topped the guide, indicating favorable construction costs.
Land investment
KBH grew its land position for the fourth consecutive quarter, indicating a strategic investment in future growth.
Share repurchase
KBH has increased its share repurchase guidance, indicating a focus on returning value to shareholders.
Negative Factors
Gross margin outlook
Management expects lower gross margins in the third quarter due to lower deliveries and regional mix.
Net orders
Net orders of 3.5K were down 13% year-over-year and 9% below forecast.
Revenue guidance
KBH lowered its revenue guidance to $6.3-$6.5bn from $6.6bn-$7bn.
KB Home (KBH) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$3.88B
Dividend Yield1.85%
Average Volume (3M)1.55M
Price to Earnings (P/E)7.2
Beta (1Y)0.96
Revenue Growth3.65%
EPS Growth-0.48%
CountryUS
Employees2,384
SectorConsumer Cyclical
Sector Strength60
IndustryResidential Construction
Share Statistics
EPS (TTM)1.50
Shares Outstanding71,733,510
10 Day Avg. Volume2,353,761
30 Day Avg. Volume1,547,210
Financial Highlights & Ratios
PEG Ratio-0.82
Price to Book (P/B)0.78
Price to Sales (P/S)0.00
P/FCF Ratio-91.80
Enterprise Value/Market Cap1.38
Enterprise Value/Revenue0.20
Enterprise Value/Gross Profit3.73
Enterprise Value/Ebitda1.65
Forecast
1Y Price Target
$58.91Price Target Upside8.79% Upside
Rating ConsensusHold
Number of Analyst Covering13
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 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: 1.56%|
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 shows strong profitability and a solid balance sheet with a stable equity ratio and manageable leverage. However, challenges in revenue growth and cash flow are concerning, with a negative revenue growth rate and a significant decline in free cash flow.Income Statement
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.78
Positive
Balance Sheet
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.74
Positive
Cash Flow
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.65
Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
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 |
| EBITDA | 798.36M | 822.89M | 778.95M | 1.10B | 723.99M | 392.44M |
| Net Income | 625.91M | 655.02M | 590.18M | 816.67M | 564.75M | 296.24M |
Balance Sheet | ||||||
| Total Assets | 6.98B | 6.94B | 6.65B | 6.65B | 5.84B | 5.36B |
| Cash, Cash Equivalents and Short-Term Investments | 269.46M | 599.19M | 727.34M | 328.52M | 290.76M | 681.19M |
| Total Debt | 1.81B | 1.71B | 1.72B | 2.35B | 1.69B | 1.75B |
| 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
Neutral
54.15
Price Trends
53.15
Positive
56.03
Negative
65.62
Negative
Market Momentum
0.34
Negative
53.89
Neutral
68.96
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KBH, the sentiment is Neutral. The current price of 54.15 is above the 20-day moving average (MA) of 52.95, above the 50-day MA of 53.15, and below the 200-day MA of 65.62, indicating a neutral trend. The MACD of 0.34 indicates Negative momentum. The RSI at 53.89 is Neutral, neither overbought nor oversold. The STOCH value of 68.96 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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 (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $2.99B | 7.34 | 13.28% | ― | 10.82% | 19.34% | |
77 Outperform | $3.09B | 6.10 | 19.02% | ― | 8.68% | 8.39% | |
77 Outperform | $2.85B | 7.83 | 24.29% | ― | 21.22% | 24.90% | |
73 Outperform | $3.83B | 19.59 | 13.38% | ― | 22.65% | 34.77% | |
73 Outperform | $5.07B | 7.15 | 14.58% | 2.44% | -0.68% | -7.99% | |
68 Neutral | $3.88B | 7.17 | 14.09% | 1.85% | 3.65% | -0.48% | |
61 Neutral | AU$2.83B | 27.14 | 4.84% | 5.11% | 2.60% | -31.70% |
* Consumer Cyclical Sector Average
Performance Comparison
KBH
KB Home
54.15
-11.43
-17.43%
MHO
M/I Homes
115.44
-3.73
-3.13%
MTH
Meritage
70.63
-4.81
-6.38%
SKY
Champion Homes
66.91
-1.21
-1.78%
TPH
Tri Pointe
32.98
-3.67
-10.01%
GRBK
Green Brick Partners
64.85
10.02
18.27%
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
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.