KE Holdings (NYSE:BEKE): Valuation Insights After Earnings, Asset Impairments, and Legal Settlement Update

KE Holdings (NYSE:BEKE) has been in the spotlight after reporting third quarter 2025 earnings, which included revenue growth, softer net income, and new asset impairments. The company also revealed a proposed settlement in a longstanding securities class action.

See our latest analysis for KE Holdings.

Following these updates, KE Holdings’ share price has seen a meaningful shift. While it jumped almost 3% over the past week, it remains down more than 8% on a total shareholder return basis over the past year. The recent buyback activity and news of a legal settlement may be shaping near-term momentum, but the big picture still reflects a company working to rebuild confidence after challenging years.

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With new earnings out and legal uncertainties easing, investors now face a crucial question: Is KE Holdings trading at an attractive discount, or has the market already accounted for the company's future potential?

Most Popular Narrative: 14% Undervalued

With KE Holdings closing at $17.5, the most-followed narrative places fair value much higher, suggesting room for upside if projections are met. This sets the stage for a deeper look into the rationales driving that valuation.

KE Holdings is diversifying revenue through rapid expansion of its high-margin, recurring service businesses, such as home renovation, furniture, and rental services. These non-transactional revenues now comprise 41% of total sales, reducing cyclicality and supporting more stable revenue and higher blended margins as the platform matures. The company's enhanced focus on operational efficiency, including centralized procurement, AI-led process improvements, and business model innovation, has already yielded tangible improvements in segment margins (notably in home renovation and rental), signaling a path to sustainable margin expansion and stronger future earnings.

Read the complete narrative.

Think these high-margin services are the secret sauce? The key numbers the narrative uses are surprisingly bold on future profits, revenue stability, and margin growth. Find out what gives the model its confidence. Are these assumptions realistic or too ambitious?

Result: Fair Value of $20.37 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, ongoing weakness in China’s real estate market and stricter regulations could still undermine KE Holdings’ path to higher earnings and margin growth.

Find out about the key risks to this KE Holdings narrative.

Another View: Valuation Risks on Market Multiples

Taking a look at market multiples, KE Holdings is trading at a price-to-earnings ratio of 41.8x. This is well above both the US Real Estate industry average of 29.5x and the peer average of 26.6x. The fair ratio, where the market could eventually settle, is 25.5x. This gap suggests the market might be overvaluing KE Holdings if growth does not accelerate. Does the premium signal underestimated momentum, or are investors taking on extra risk?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own KE Holdings Narrative

Prefer to dig deeper on your own? It’s easy to check the facts firsthand and craft your own narrative in just a few minutes. Do it your way

A great starting point for your KE Holdings research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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