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1. Company Snapshot

1.a. Company Description

KB 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.

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1.b. Last Insights on KBH

KB Home's recent performance was driven by strong Q3 earnings, with revenue and EPS beating estimates. The company's focus on built-to-order homes and community count growth is expected to benefit revenues. Additionally, rate cuts and a mix shift towards built-to-order homes should boost margins. Recent grand openings of new communities in French Valley, California, and St. Cloud, Florida, also contributed positively. Institutional investors, such as Creative Planning, have increased their stake in the company, with a 75.1% increase in shares.

1.c. Company Highlights

2. KB Home's Strong Q3 Earnings Exceed Expectations

KB Home reported robust third-quarter financial results, with revenue reaching $1.6 billion and diluted earnings per share coming in at $1.61, exceeding guidance across key metrics. The company's gross margin was 18.9%, excluding inventory-related charges, while the adjusted operating income margin was 8.8%. The strong EPS beat is notable, with actual EPS coming in at $1.61 relative to estimates of $1.5. The revenue figure was also impressive, driven by the company's focus on built-to-order homes, which currently comprise around 50% of its sales.

Publication Date: Sep -26

📋 Highlights
  • Revenue & Earnings Exceeded Guidance: Q3 revenue reached $1.6 billion, with diluted EPS at $1.61, driven by improved cost management despite a 8% YoY revenue decline.
  • Share Repurchases & Dividends: $440 million repurchased YTD (11% of shares), returning $490 million to shareholders in 2025, with $50–150 million planned for Q4.
  • Build-to-Order Strategy: 50% of sales now BTO (targeting 70%), aiming to boost margins by reducing inventory and improving closing visibility post-2022 inventory build-up.
  • Cost & Operational Efficiency: Gross margin at 18.9% (240 bps lower YoY), with SG&A ratio target of 9.3–9.7% in Q4, reflecting headcount reductions and lower lumber costs.
  • Full-Year Outlook: Projects $6.1–6.2 billion revenue in 2025, with $483,000 average selling price, while remaining cautious on 2026 guidance due to market volatility.

Operational Highlights and Shift to Built-to-Order Model

The company achieved a 10-day reduction in build times to 130 days, lower direct costs, and consistent customer satisfaction. KB Home opened 32 new communities in the quarter, ending the period with 264 active communities. The company is shifting its focus to built-to-order homes, which are expected to increase to a historical average of 70%. This strategy aims to improve margins and provide greater visibility into future closing projections, as the company seeks to capitalize on the benefits of its build-to-order model.

Capital Allocation and Shareholder Returns

KB Home repurchased $188 million of its shares during the quarter, bringing the total year-to-date repurchase amount to $440 million, representing 11% of the outstanding share count at the beginning of the year. Including dividends, the company returned over $490 million to shareholders this year. The company's commitment to returning capital to shareholders is evident, and with a dividend yield of 1.58%, investors can expect continued returns.

Valuation and Outlook

With a P/E ratio of 8.11, P/B ratio of 0.9, and P/S ratio of 0.66, KB Home's valuation appears reasonable. The company's ROE of 12.32% and ROIC of 12.74% indicate strong profitability. As KB Home navigates the challenging market environment, its focus on built-to-order homes and cost management is expected to drive margin improvement. The company's guidance for the fourth quarter and full-year 2025 revenue is encouraging, and its cautious optimism about 2026 is understandable given the volatile market environment.

Future Prospects and Challenges

KB Home remains cautious about providing specific 2026 guidance, but anticipates an overall improvement in margins as it transitions to built-to-order homes, increases community count for the spring selling season, and benefits from improving affordability. The company sees potential for a solid year in 2026, driven by its strategic focus on built-to-order homes and cost management. As the company continues to navigate the challenges of the housing market, its commitment to shareholder returns and reasonable valuation make it an attractive investment opportunity.

3. NewsRoom

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KB Home to Release 2025 Fourth Quarter and Full Year Earnings on December 18, 2025

Dec -04

Source: businesswire.com

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Why KB Home (KBH) Outpaced the Stock Market Today

Dec -03

Source:

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KB Home $KBH Shares Sold by Fisher Asset Management LLC

Dec -03

Source: defenseworld.net

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KB Home Announces the Grand Opening of Its Newest Community in North Jacksonville, Florida

Dec -01

Source: businesswire.com

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KB Home Announces the Grand Opening of Its Newest Community in Orlando, Florida

Nov -28

Source: businesswire.com

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KB Home (KBH) Surpasses Market Returns: Some Facts Worth Knowing

Nov -26

Source:

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KB Home $KBH Shares Bought by Creative Planning

Nov -25

Source: defenseworld.net

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Stocks in This Sector Are Getting a Big Lift on Rising Hopes of a Fed Rate Cut Next Month

Nov -21

Source: investopedia.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (9.62%)

6. Segments

Homebuilding - West Coast

Expected Growth: 9.5%

KB Home's 9.5% growth in West Coast homebuilding is driven by strong demand for new homes, fueled by low unemployment, rising wages, and limited housing supply. Additionally, the company's focus on first-time homebuyers, who account for 55% of sales, and its strategic land acquisition and development strategies have contributed to its growth in the region.

Homebuilding - Central

Expected Growth: 9.0%

KB Home's Central segment growth of 9.0% is driven by increasing demand for affordable housing, strategic land acquisition, and effective cost management. Additionally, the segment benefits from a strong economy, low unemployment, and favorable demographics in the region, leading to higher sales and revenue growth.

Homebuilding - Southwest

Expected Growth: 10.5%

Strong demand in the Southwest region, driven by job growth, low unemployment, and migration to affordable markets. KB Home's focus on first-time homebuyers and entry-level products resonates with the region's demographics. Additionally, the company's strategic land acquisition and development strategies have positioned it for success in this growing market.

Homebuilding - Southeast

Expected Growth: 10.0%

KB Home's Southeast homebuilding segment growth is driven by strong demand in Florida and the Carolinas, fueled by population growth, job creation, and migration to these regions. Additionally, the company's focus on first-time homebuyers and affordable pricing has resonated with customers, contributing to the 10.0% growth.

Financial Services

Expected Growth: 8.0%

KB Home's 8.0% growth in Financial Services is driven by increasing mortgage banking revenue, fueled by rising home sales and higher average selling prices. Additionally, the company's strategic partnerships with mortgage providers and its own mortgage banking operations contribute to the growth. Furthermore, KB Home's focus on providing a comprehensive homebuying experience, including title and insurance services, also supports the segment's expansion.

7. Detailed Products

Single-Family Homes

KB Home offers a wide range of single-family homes, from starter homes to luxury estates, designed to meet the needs of various lifestyles and budgets.

Townhomes

KB Home's townhomes offer a low-maintenance lifestyle with shared walls, perfect for those who want the benefits of homeownership without the upkeep of a single-family home.

Condominiums

KB Home's condominiums provide a carefree lifestyle with shared amenities and services, ideal for those who want to own their home without the burden of exterior maintenance.

Active Adult Communities

KB Home's active adult communities are designed for adults 55+, offering a resort-style lifestyle with amenities and services tailored to this demographic.

Urban Infill Communities

KB Home's urban infill communities offer new homes in established neighborhoods, close to urban centers, public transportation, and local amenities.

8. KB Home's Porter Forces

Forces Ranking

Threat Of Substitutes

KB Home faces moderate threat from substitutes, as customers have limited alternatives to traditional single-family homes. However, the rise of alternative housing options, such as apartments and condos, poses a moderate threat.

Bargaining Power Of Customers

KB Home's customers have low bargaining power due to the company's strong brand reputation and limited competition in the homebuilding industry.

Bargaining Power Of Suppliers

KB Home's suppliers, such as lumber and material providers, have moderate bargaining power due to the company's large scale of operations and diversified supplier base.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry in the homebuilding industry, including significant capital requirements and regulatory hurdles.

Intensity Of Rivalry

The homebuilding industry is highly competitive, with many established players competing for market share. KB Home faces intense rivalry from competitors such as Lennar, D.R. Horton, and PulteGroup.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 31.43%
Debt Cost 8.15%
Equity Weight 68.57%
Equity Cost 12.63%
WACC 11.22%
Leverage 45.83%

11. Quality Control: KB Home passed 8 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Toll Brothers

A-Score: 5.7/10

Value: 6.8

Growth: 8.1

Quality: 6.7

Yield: 2.0

Momentum: 4.0

Volatility: 6.3

1-Year Total Return ->

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Stock-Card
Taylor Morrison

A-Score: 5.4/10

Value: 7.9

Growth: 5.7

Quality: 7.2

Yield: 0.0

Momentum: 5.0

Volatility: 6.7

1-Year Total Return ->

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Stock-Card
M/I Homes

A-Score: 5.4/10

Value: 7.8

Growth: 8.2

Quality: 7.0

Yield: 0.0

Momentum: 3.5

Volatility: 5.7

1-Year Total Return ->

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Stock-Card
Meritage Homes

A-Score: 5.2/10

Value: 8.4

Growth: 5.3

Quality: 6.5

Yield: 3.0

Momentum: 2.0

Volatility: 5.7

1-Year Total Return ->

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Stock-Card
KB Home

A-Score: 4.9/10

Value: 6.2

Growth: 7.1

Quality: 5.0

Yield: 3.0

Momentum: 2.5

Volatility: 5.7

1-Year Total Return ->

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Stock-Card
Century Communities

A-Score: 4.9/10

Value: 7.8

Growth: 7.6

Quality: 4.6

Yield: 3.0

Momentum: 1.5

Volatility: 5.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

64.19$

Current Price

64.19$

Potential

-0.00%

Expected Cash-Flows