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what it is
KB Home builds and sells homes, then helps some buyers finance them through a mortgage joint venture.
how it gets paid
Last year KB Home made $6.2B in revenue (~$6.24B in filings). Single-family houses was the main engine at $4.62B, or 74% of sales.
why growth slowed
Revenue fell 10.0% last year. The quarter capped a rough fiscal 2025. Full-year revenue fell 10% to $6.24 billion.
what just happened
KB Home posted $1.55 EPS, below the $1.75 estimate by 11.43%.
At a glance
B+ balance sheet — decent shape, but not bulletproof
70/100 earnings predictability — reasonably predictable
9.9x trailing p/e — the market's not buying it — or you found a deal
1.9% dividend yield — cash in your pocket every quarter
7.0% return on capital — nothing to write home about
xvary composite: 58/100 — below average
What they do
KB Home builds and sells homes, then helps some buyers finance them through a mortgage joint venture.
This is a scale game. KB Home sold 12,902 homes in fiscal 2025 across 49 markets in nine states and Washington, D.C. That reach matters when buyers still need homes, but your edge disappears fast when orders slow and fixed costs stay put.
How they make money
$6.2B
annual revenue · their business grew -10.0% last year
single-family houses
$4.62B
10.0%
townhouses
$1.00B
10.0%
condominiums
$0.60B
10.0%
financial services and other
$0.02B
flat
The products that matter
builds and sells homes
homebuilding
$6.2B · 99.6% of revenue
it's effectively the whole company. This $6.2B revenue base declined 10.0% last year, which tells you why the market only pays 9.9x earnings for it.
the whole story
land and venture activity
joint ventures and other
0.4% of revenue
the data here is thin, and that's the point. Non-core activity is too small to rescue the thesis or break it while homebuilding drives 99.6% of revenue.
not the driver
Key numbers
9.9x
trailing p/e
P/E → price-to-earnings → what you pay for each dollar of profit. You are paying less than 10 times earnings for a builder that just posted a bad year.
27%
eps drop
EPS → earnings per share → profit for each share you own. A 27% fall in fiscal 2025 says the cycle is already hitting harder than the stock's cheap multiple suggests.
11.0%
operating margin
Operating margin → profit after running the business → how much room management has before pain starts. Eleven cents on the dollar is decent, but not bulletproof in a downturn.
$68
base-case price
That is the 18-month target, just $6.83 above today's $61.17 price. Cheap does not automatically mean huge upside.
Financial health
B+
strength
- balance sheet grade B+ — solid but not elite
- risk rank 3 — safer than 50% of stocks
- price stability 50 / 100
- long-term debt $1.7B (30% of capital)
- net profit margin 7.2% — keeps 7 cents of every dollar in revenue
- return on equity 10% — $0.10 profit for every $1 investors have put in
B+ — functional but not a standout on the balance sheet.
Total return vs. market
You invested $10,000 in KBH 3 years ago → it's now worth $18,180.
The index would have given you $14,540.
source: institutional data · total return
What just happened
missed estimates
KB Home posted $1.55 EPS, below the $1.75 estimate by 11.43%.
The quarter capped a rough fiscal 2025. Full-year revenue fell 10% to $6.24 billion, and full-year EPS fell 27% to $6.15 as home demand cooled.
$1.69B
quarter revenue
$1.55
quarter diluted EPS
11.43%
surprise
the number that mattered
The miss matters because it landed after fiscal 2025 EPS had already fallen 27%, which tells you the slowdown was still not fully under control.
-
fiscal 2025 (ended november 30th) was a difficult year for kb home.
-
indeed, earnings per share declined 27%, vs. prior year, during the 12-month period.
-
several factors contributed to the shortfall, most a 10% decrease in total revenues, to $6.24 billion.affordability issues, the product of relatively high borrowing costs and elevated home prices, pushed many would-be buyers out of the market for a new home.
-
this waning demand was evident in the 9% decline in the number of homes sold during the fiscal year.the top- and bottom-line retreats also widened in the final three months of fiscal 2025, suggesting that a turnaround is not likely in the coming quarters.
-
we are again lowering our forecast for the current fiscal year.borrowing costs have come down some in recent months, but likely not enough to make owning a home more viable for buyers, particularly those at the entry-level and first-time move-up levels. it also has forced the homebuilders (kb home included) to ramp up the use of selling incentives and rebates to move homes. this, along with higher operating costs, particularly for land, is hurting kb home’s operating margin and ultimately the bottom line. the slumping demand for new homes was reflected in the company’s fundamentals during the november-quarter.
source: company earnings report, 2026
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What could go wrong
KB Home is not fighting an abstract risk list. It is fighting a housing-cycle math problem: 99.6% of revenue comes from homebuilding, sales already fell 10.0%, and the balance sheet is good enough for a slowdown, not good enough to make you carefree.
high
mortgage-rate sensitivity and affordability
KB Home sells homes. That sounds obvious because it is. When monthly payments stop working for buyers, demand slows fast and there is nowhere else in the model to hide.
this risk touches 99.6% of revenue and pressures the entire $6.2B business.
med
margin squeeze from incentives and build costs
11.0% operating margin is respectable, not lavish. If the company has to discount homes to move inventory or absorbs higher costs, earnings feel it quickly.
the cushion is a 7.2% net margin. There is room for pressure, not room for denial.
med
balance-sheet pressure in a longer slowdown
B+ balance sheet grade is respectable, but $1.7B of long-term debt and 30% debt-to-capital mean this is not a zero-concern balance sheet.
if volumes stay soft, debt matters more and the market gets less patient with a 9.9x multiple.
med
the cheap-stock trap
9.9x trailing earnings and a $5.50 fy2027 EPS estimate look inexpensive. They only stay attractive if profits hold up while revenue finds a floor.
with the stock at $61.17 and the 3–5 year midpoint at $70, execution has to do most of the work.
if you own KBH, the line is simple: you need housing demand to stabilize before weaker revenue, slimmer margins, and $1.7B of debt start telling the same story.
source: institutional data · regulatory filings · risk analysis
Pay attention to
margin
operating margin versus 11.0%
this is the line between a cheap cyclical and a value trap. If margins slip, the 9.9x multiple stops looking conservative.
earnings
next update on revenue direction
sales fell 10.0% last year. You want stabilization before you ask the market to pay more than a skeptical multiple.
estimate trend
fy2027 revenue estimate of $6B
if analysts start cutting from here, the market will read that as proof the slowdown still has room to run.
ownership
institutional selling streak
two straight quarters of net selling is not fatal. It does tell you the large holders are waiting for cleaner evidence.
Analyst rankings
earnings predictability
70 / 100
in human-speak, analysts think the business is reasonably readable for a builder, but the housing cycle still writes surprise endings.
balance sheet grade
B+
better than shaky, short of fortress. You can live with it, but you should not get casual about it.
valuation
9.9x trailing p/e
cheap relative to much of the market. The catch is the market already watched revenue fall 10.0%.
source: institutional data
Institutional activity
institutions have been net selling for 2 consecutive quarters — 109 buyers vs. 158 sellers in 4q2025. total institutional holdings: 62.1M shares. net selling for 2 quarters.
source: institutional data
Price targets
3-5 year target range
$46
$90
$61
current price
$68
target midpoint · +11% from current · 3-5yr high: $105 (+70% · 16% ann'l return)
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