Kb Home (NYSE: KBH)

Sector: Consumer Cyclical Industry: Residential Construction CIK: 0000795266
Market Cap 5.06 Bn
P/B 9.83
P/E -39.14
P/S 3.32
ROIC (Qtr) 7.21
Div Yield % 0.76
Rev 1y % (Qtr) -15.28
Total Debt (Qtr) 1.69 Bn
Debt/Equity (Qtr) 0.43
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About

KB Home, a prominent name in the homebuilding industry, is one of the largest and most recognized homebuilding companies in the United States. Operating under the ticker symbol KBH, the company has been building homes for over 65 years, with a focus on first-time and first move-up homebuyers, as well as second move-up and active adult homebuyers. KB Home's operations span across nine states and 47 major markets. The company's primary business is homebuilding, accounting for 99.5% of its total revenues. KB Home's business strategy, known as KB Edge,...

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Investment thesis

Bull case

  • Robust free cash flow of 287.28M exceeds capital expenditure of 48.40M by 5.94x, indicating strong organic growth funding capability.
  • Strong tangible asset base of 6.68B provides 3.95x coverage of total debt 1.69B, indicating robust asset backing and low credit risk.
  • Operating cash flow of 335.68M provides strong 54.85x coverage of operating expenses 6.12M, showing operational efficiency.
  • Retained earnings of 3.63B represent substantial 0.93x of equity 3.90B, indicating strong internal capital generation.
  • Free cash flow of 287.28M provides solid 46.94x coverage of operating expenses 6.12M, showing operational efficiency.

Bear case

  • Operating cash flow of 335.68M barely covers its investment activities of (61.80M), with a coverage ratio of -5.43, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • With cash reserves of 228.61M against inventory of 5.67B, the 0.04 cash-to-inventory ratio suggests potential liquidity risks if inventory turnover slows, particularly concerning given current supply chain volatilities.
  • Operating cash flow of 335.68M provides thin coverage of dividend payments of (68.57M) with a -4.90 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 228.61M provide limited coverage of acquisition spending of (13.40M), which is -17.06x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Free cash flow of 287.28M represents just -3935.37x of debt issuance (73000), suggesting concerning reliance on leverage rather than internal cash generation for growth.

Segments Breakdown of Revenue (2025)

Segments Breakdown of Revenue (2025)

Peer comparison

Companies in the Residential Construction
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 DHI Horton D R Inc /De/ 56.51 Bn 105.92 7.04 5.55 Bn
2 TOL Toll Brothers, Inc. 29.11 Bn 76.92 7.08 2.79 Bn
3 PHM Pultegroup Inc/Mi/ 28.02 Bn 12.63 1.62 2.16 Bn
4 LEN Lennar Corp /New/ 23.56 Bn -229.13 7.79 4.08 Bn
5 NVR Nvr Inc 21.52 Bn 16.06 2.13 1.05 Bn
6 IBP Installed Building Products, Inc. 8.62 Bn -487.54 19.34 0.99 Bn
7 TMHC Taylor Morrison Home Corp 6.86 Bn 8.06 0.82 2.26 Bn
8 MTH Meritage Homes CORP 5.67 Bn 12.52 0.97 1.83 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.87 1.47
EV to Cash from Ops. EV/CFO -18.33 43.01
EV to Debt EV to Debt 3.43 37.82
EV to EBIT EV/EBIT -76.82 48.76
EV to EBITDA EV/EBITDA 1,712.36 112.58
EV to Free Cash Flow [EV/FCF] EV/FCF -24.54 11.82
EV to Market Cap EV to Market Cap 1.15 1.26
EV to Revenue EV/Rev 3.82 3.28
Price to Book Value [P/B] P/B 9.83 9.23
Price to Earnings [P/E] P/E -39.14 -14.72
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 6.25 8.23
Dividend Payout Ratio % Div Payout % (Qtr) 15.90 6.29
Dividend per Basic Share Div per Share (Qtr) 1.00 0.54
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 23.64 96.10
Interest Coverage Int. cover (Qtr) 0.00 142.03
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -23.12 27.50
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -61.77 196.58
Dividend Growth (1y) % Div 1y % (Qtr) 5.26 4.02
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -34.54 -29.39
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -31.64 -30.05
EBIT Growth (1y) % EBIT 1y % (Qtr) -34.87 -31.27
EBT Growth (1y) % EBT 1y % (Qtr) -34.87 -32.05
EPS Growth (1y) % EPS 1y % (Qtr) -27.82 -25.62
FCF Growth (1y) % FCF 1y % (Qtr) -11.17 341.90
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -20.36 -14.63
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.93 1.00
Cash Payout Ratio Cash Payout (Qtr) 0.18 0.13
Cash Ratio Cash Ratio 0.00 0.23
Current Ratio Current Ratio 0.00 0.81
Debt to Equity Ratio Debt/Equity (Qtr) 0.43 0.58
Interest Cover Ratio Int Coverage (Qtr) 0.00 142.03
Times Interest Earned Times Interest Earned (Qtr) 0.00 142.03
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 9.50 10.57
EBIT Margin % EBIT Margin % (Qtr) 8.89 9.64
EBT Margin % EBT Margin % (Qtr) 8.89 9.44
Gross Margin % Gross Margin % (Qtr) 18.90 22.26
Net Profit Margin % Net Margin % (Qtr) 6.90 7.17