KB Home (KBH) Stock Forecast & Price Target

KB Home demonstrates a promising outlook through expectations of greater-than-expected demand, which is anticipated to lead to stronger volumes and firmer pricing, thereby driving outsized earnings growth. Furthermore, management's strategy of pivoting back to its Build-to-Order (BTO) model, along with aggressive fixed cost reductions and share buybacks, contributes to an upward revision of the FY'26E EPS estimate by 3%. Additionally, the company is projected to achieve improved gross margins, with FY'25E Homebuilding GM% rising to 19.2%, reflecting enhanced profitability despite previous lower revenue estimates.

KB Home's financial outlook has deteriorated significantly, with FY'26E orders projected to increase only by 1%, a stark decline from the previously estimated 5%, and with the annual rate of new orders expected to decline by 4% year-over-year. The company's revenue for FY'25E is estimated to decrease to $6.16 billion, reflecting an 11% year-over-year decline, alongside disappointing average selling prices (ASPs) and a reduction in projected closings. Additionally, the FY'26E EPS estimate has been adjusted sharply downward to $4.05, representing a 26% drop and falling 33% below prior consensus expectations, indicating persistent challenges within the residential construction market.