KB Home (KBH) Stock Forecast & Price Target

The positive outlook for KB Home's stock is supported by expectations of stronger demand leading to increased sales volumes and improved pricing, which are anticipated to drive significant earnings growth. The company's FY'26 EPS estimate has been adjusted to reflect a 3% increase, aided by aggressive cost management and stock buybacks, despite lower expectations for orders and homebuilding revenue. Additionally, FY'25 gross margins are projected to rise to 19.2%, indicating enhanced operational efficiency and profitability despite a slight decline from the previous year.

The analysis indicates a negative outlook for KB Home primarily due to expected declines in revenue and orders, with FY'25 earnings projected at $6.16 billion, reflecting an 11% year-over-year decrease and revised order growth of only 5%. Additionally, fundamental risks such as a slowdown in the housing market, decreasing consumer demand in California—where over a third of its revenue is derived—due to worsening affordability, and rising mortgage rates impacting lower-tier housing segments exacerbate concerns for the company’s financial stability. Furthermore, increasing land costs and limited land opportunities in key markets threaten to further pressure margins and hinder potential future growth.