Update shared on29 Jul 2025
Fair value Decreased 6.65%KB Home’s consensus price target has been lowered to $62.00 as analysts cut earnings estimates and cite diminished orders, a weaker backlog, and margin pressures from ongoing price reductions.
Analyst Commentary
- Lowered earnings estimates for fiscal 2025 and 2026, with some firms projecting a 10% cut to forward EPS expectations.
- Q2 orders declined by 13%, significantly missing expectations, and a weakened backlog is anticipated to pressure 2026 deliveries.
- Company issued reduced revenue and margin guidance, prompting concerns over future profitability and ability to hit even lowered targets.
- Management is relying on price reductions to stimulate buyer traffic, contributing to a “much softer” gross margin outlook.
- While Q2 results were generally in-line with consensus, bearish analysts remain cautious due to heightened risks to forward guidance and ongoing delivery challenges.
What's in the News
- KB Home launched multiple new-home communities across several states, including Landings and Reserves at Caspian Bay (Nevada), Camas Ridge (Washington), Lenox at Park West (California), Stoney Chase (Texas), Sandal Key (Florida), The Sanctuary Townhomes (Florida), Parkside at Kennedy Ranch (California), Hilliard Ridge (Florida), Pivot Pointe (Idaho), Groves at Caldwell Park (Nevada), Enclave at White River (Washington), and The Preserve at Legends Pointe (Florida), emphasizing customizable, energy-efficient homes with extensive community amenities.
- Berkshire Hathaway HomeServices California Properties partnered with KB Home to lead sales and marketing of the final homes at Ridgeview in North San Diego County, featuring high sustainability and fire-safety standards.
- KB Home was dropped from multiple Russell Growth indices, including the Russell 2000 Growth, Russell 2500 Growth, Russell 3000 Growth, and related benchmarks.
- The company repurchased 8,387,121 shares for $549.99 million, completing its announced buyback program.
- KB Home issued 2025 guidance with expected housing revenues of $6.30–$6.50 billion and homebuilding operating income margin of 8.6%–9.0%.
Valuation Changes
Summary of Valuation Changes for KB Home
- The Consensus Analyst Price Target has fallen from $66.42 to $62.00.
- The Consensus Revenue Growth forecasts for KB Home has significantly fallen from -0.2% per annum to -3.8% per annum.
- The Future P/E for KB Home has fallen from 10.72x to 9.79x.
Disclaimer
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