UBS has adjusted its price target for KB Home (KBH, Financial), reducing it from $86 to $80 while maintaining a Buy rating on the shares. This revision comes in the wake of KB Home's second quarter earnings report. The change reflects UBS's updated expectations for the company's future performance, suggesting a reassessment of its valuation metrics despite their continued positive outlook on the stock.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 11 analysts, the average target price for KB Home (KBH, Financial) is $64.73 with a high estimate of $86.00 and a low estimate of $52.00. The average target implies an upside of 21.39% from the current price of $53.32. More detailed estimate data can be found on the KB Home (KBH) Forecast page.
Based on the consensus recommendation from 15 brokerage firms, KB Home's (KBH, Financial) average brokerage recommendation is currently 2.9, indicating "Hold" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for KB Home (KBH, Financial) in one year is $58.11, suggesting a upside of 8.98% from the current price of $53.32. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the KB Home (KBH) Summary page.
KBH Key Business Developments
Release Date: June 23, 2025
- Total Revenue: $1.5 billion in the second quarter.
- Diluted Earnings Per Share (EPS): $1.50 in the second quarter.
- Gross Margin: 19.7%, excluding inventory-related charges.
- SG&A Expenses: 10.7% of housing revenues.
- Operating Income Margin: 9% of homebuilding revenues.
- Net Orders: 3,460 in the second quarter.
- Average Community Count: 254, a 5% increase year-over-year.
- Backlog: 4,776 homes valued at $2.3 billion.
- Average Selling Price: Approximately $489,000.
- Net Income: $108 million in the second quarter.
- Book Value Per Share: Nearly $59, a 10% year-over-year increase.
- Share Repurchases: $200 million in the second quarter.
- Land Investment: Over $513 million in land acquisition and development.
- Total Liquidity: $1.2 billion, including $309 million of cash.
- Debt to Capital Ratio: 32.2%.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- KB Home (KBH, Financial) delivered solid financial results in the second quarter, meeting or exceeding guidance ranges across key metrics.
- The company repurchased $200 million of its shares in the second quarter, demonstrating a commitment to returning cash to shareholders.
- Build times improved sequentially by seven days, returning to pre-pandemic levels, which contributed to exceeding delivery expectations.
- The company achieved a gross margin of 19.7%, excluding inventory-related charges, which was above the guidance range.
- KB Home (KBH) maintained a high customer satisfaction level, receiving numerous division-level honors from Avid CX.
Negative Points
- Affordability challenges persist due to elevated mortgage interest rates and macroeconomic uncertainties, impacting consumer confidence and home purchase decisions.
- Net orders declined in April and May, not following the typical spring trajectory, leading to a revision of fiscal 2025 guidance.
- The average absorption pace per community decreased to 4.5% net orders compared to 5.5% in the previous year's second quarter.
- Municipal delays in utility signoffs and certificates of occupancy impacted the timing of community openings, affecting net orders.
- The company revised its revenue expectation for fiscal 2025 to between $6.3 billion and $6.5 billion, indicating a lower top line and contributing to lower margins.
