Breaking Down KB Home (KBH) Financial Health: Key Insights for Investors

Are you keeping a close watch on the housing market and wondering about the financial stability of major homebuilders? Specifically, how is KB Home performing? In 2024, KB Home demonstrated robust financial results, delivering nearly 14,200 homes and driving total revenues to roughly $7 billion. The diluted earnings per share increased to $8.45, and the book value expanded by 12%. But how sustainable is this growth, and what are the key factors driving KB Home's financial health? Read on to discover detailed insights into KB Home's financial performance, key metrics, and expert analysis, helping you make informed investment decisions.

KB Home (KBH) Revenue Analysis

Understanding KB Home's (KBH) revenue streams involves looking at the primary sources, growth trends, segment contributions, and any significant changes.

Primary Revenue Sources:

• Homebuilding: The vast majority of KB Home's revenue comes from its homebuilding activities.
• Financial Services: A smaller portion of revenue is generated through financial services, primarily through its mortgage banking joint venture.

Year-over-Year Revenue Growth:

• For the full year 2024, KB Home reported revenues of $6.93 billion, an 8% increase compared to 2023.
• In the fourth quarter of 2024, revenues were up 19% year-over-year, reaching $2.00 billion.
• This growth was driven by a 17% increase in homes delivered and a 3% rise in the average selling price.

Contribution of Business Segments to Overall Revenue:

KB Home's revenue can be broken down by geographic segments within its homebuilding operations:

• West Coast: Contributed 43.4% to the total revenue.
• Southwest: Accounted for 17.85% of the total revenue.
• Central: Represented 21.27% of the total revenue.
• Southeast: Made up 17.1% of the total revenue.

Significant Changes in Revenue Streams:

KB Home has seen some notable shifts impacting its revenue:

• Increased Deliveries: Higher numbers of homes delivered have been a key driver of revenue growth. In 2024, homes delivered were up 7% to 14,169.
• Average Selling Price (ASP): The average selling price has seen slight increases, contributing to overall revenue. The average selling price rose slightly to $486,900 for the full year 2024.
• Strategic Investments: Investments in land acquisition and development, which increased by over 50% year-over-year, support future revenue growth by expanding community count.
• Built-to-Order Model: KB Home's built-to-order approach allows them to maintain competitive pricing and customer satisfaction, which helps sustain demand and revenue.
• Community Count: The company opened 106 new communities in 2024, with the ending community count growing by 7% to 258.

Here is a summary of KB Home's financial performance for the year 2024:

For more insights, explore Mission Statement, Vision, & Core Values of KB Home (KBH).

KB Home (KBH) Profitability Metrics

Understanding KB Home's (KBH) profitability involves analyzing its gross profit, operating profit, and net profit margins. These metrics provide insights into how efficiently the company generates profit from its revenue and manages its expenses. Examining these figures over time helps identify trends and assess the sustainability of KB Home's financial performance.

Here's an overview of KB Home’s profitability, based on available information:

• Gross Profit: Gross profit is calculated by subtracting the cost of goods sold (COGS) from revenue. It indicates how efficiently a company manages its production costs.
• Operating Profit: Operating profit is calculated by subtracting operating expenses from gross profit. Operating expenses include administrative and selling costs.
• Net Profit: Net profit is what remains after all expenses, including interest and taxes, are subtracted from revenue.

KB Home's financial performance can be further illuminated by comparing its profitability ratios with industry averages. This benchmark helps to gauge whether KB Home is performing above or below its peers. Industry averages can vary, so it's essential to consider the specific sector and market conditions when making comparisons.

Operational efficiency plays a critical role in KB Home's profitability. Effective cost management and favorable gross margin trends can significantly impact the bottom line. Monitoring these aspects helps investors understand how well KB Home controls its expenses and maximizes its revenue.

To provide a clearer picture, here's a look at some key financial data points for KB Home:

Analyzing these figures and trends provides a comprehensive understanding of KB Home's financial health and profitability. For further insights into the company and its investors, consider exploring this resource: Exploring KB Home (KBH) Investor Profile: Who’s Buying and Why?

KB Home (KBH) Debt vs. Equity Structure

Understanding how KB Home (KBH) manages its debt and equity is crucial for assessing its financial strategy and risk profile. This involves looking at the levels of debt, key ratios, and any recent financing activities.

As of the fiscal year 2024:

• KB Home had a total debt of $1.77 billion.
• The debt consisted of $1.76 billion in senior notes.

KB Home's debt-to-equity ratio provides insights into its financial leverage. A lower ratio generally indicates less risk. As of November 30, 2024, KB Home's debt-to-equity ratio was approximately 0.55. This ratio is calculated by dividing the total liabilities by stockholders equity.

KB Home's approach to balancing debt and equity involves strategic decisions around issuing debt, managing credit ratings, and utilizing equity financing. Recent activities include:

• In Q4 2024, KB Home repaid $300 million in maturing senior notes.
• The company issued $350 million in new senior notes due 2034, with an interest rate of 6.875%.
• KB Home's credit ratings were affirmed by major agencies, reflecting a stable outlook.

The following table summarizes key aspects of KB Home's debt profile as of November 30, 2024:

These financial strategies reflect KB Home's efforts to maintain a balanced capital structure, manage financial risk, and support growth initiatives. You might also be interested in Mission Statement, Vision, & Core Values of KB Home (KBH).

KB Home (KBH) Liquidity and Solvency

Assessing KB Home's (KBH) financial health involves a close look at its liquidity and solvency positions. Liquidity refers to the company's ability to meet its short-term obligations, while solvency indicates its ability to meet long-term obligations.

Assessing KB Home's Liquidity:

Several key metrics help in understanding KB Home's (KBH) liquidity position:

• Current Ratio: The current ratio is a liquidity ratio that measures a company's ability to pay short-term obligations. KB Home's current ratio for the quarter that ended in August 2024 was 5.52. The current ratio averaged 5.7x for fiscal years ending November 2020 to 2024.
• Quick Ratio: As of December 2024, the quick ratio was 2.53.
• Cash Ratio As of December 2024, the cash ratio was 1.56.

These ratios provide a snapshot of KB Home's (KBH) ability to cover its short-term liabilities with its most liquid assets.

Analysis of Working Capital Trends

Working capital is the difference between a company's current assets and current liabilities. Analyzing the trends in working capital can provide insights into the company's operational efficiency and short-term financial health.

Change in Working Capital:

• February 28, 2025: -$469.297M, -256.20%
• November 30, 2024: $145.699M, 38.48%
• August 31, 2024: -$271.733M, -4,172.53%

Cash Flow Statements Overview

An overview of cash flow statements helps to understand the trends in operating, investing, and financing activities. Reviewing these trends provides a more complete picture of the company’s ability to generate cash and manage its financial obligations.

Key figures from the cash flow statement for the fiscal year 2024:

• Operating Cash Flow: $362.72 million
• Capital Expenditures: -$39.31 million
• Free Cash Flow: $323.411 million

Liquidity Strengths

KB Home (KBH) demonstrates several liquidity strengths:

• Cash and Cash Equivalents: As of February 28, 2025, $267.8 million. At the end of fiscal year 2024, the company had $598 million in cash and cash equivalents.
• Available Credit Facilities: The company had $981.7 million of available capacity under its unsecured revolving credit facility as of February 28, 2025.
• Total Liquidity: $1.25 billion as of February 28, 2025, which includes cash and cash equivalents and available capacity under the unsecured revolving credit facility, with $100 million of cash borrowings outstanding. Total liquidity was $1.68 billion as of November 30, 2024.

These figures indicate a solid position to manage short-term financial needs.

To delve deeper into KB Home's (KBH) financial health, consider reading this comprehensive analysis: Breaking Down KB Home (KBH) Financial Health: Key Insights for Investors

KB Home (KBH) Valuation Analysis

Determining whether KB Home (KBH) is overvalued or undervalued involves analyzing several key financial metrics and market indicators. These include price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios, stock price trends, dividend yield and payout ratios (if applicable), and analyst consensus.

Let's delve into these aspects to provide a clearer picture of KBH's valuation:

• Price-to-Earnings (P/E) Ratio: The P/E ratio compares a company's stock price to its earnings per share (EPS). As of recent data, KB Home's trailing twelve months (TTM) P/E ratio stands at 9.63. This indicates how much investors are willing to pay for each dollar of KB Home's earnings.
• Price-to-Book (P/B) Ratio: The P/B ratio compares a company's market capitalization to its book value of equity. KB Home's most recent P/B ratio is approximately 1.21. This ratio can help investors determine if the stock is trading at a reasonable price compared to its net asset value.
• Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: The EV/EBITDA ratio compares a company's enterprise value (total market value plus debt, minus cash) to its earnings before interest, taxes, depreciation, and amortization (EBITDA). This ratio provides a more comprehensive valuation measure, especially when comparing companies with different capital structures.

Analyzing these ratios in isolation is not sufficient. It's crucial to compare them against industry averages and historical values to gauge whether KB Home is relatively overvalued or undervalued.

Here’s a look at KB Home's stock performance and dividend information:

• Stock Price Trends: Over the past year, KB Home has shown significant stock price appreciation. As of April 2025, the stock has delivered a +73.42% return to investors. Reviewing long-term stock price trends helps investors understand the stock's historical performance and potential future growth.
• Dividend Yield and Payout Ratios: As of April 2025, KB Home offers a dividend yield of approximately 1.64%, with an annualized payout of $1.00 per share. The dividend payout ratio, which indicates the percentage of earnings paid out as dividends, can offer insights into the sustainability of the dividend payments.

Lastly, it's beneficial to consider the consensus of financial analysts regarding KB Home's stock. Analyst ratings typically fall into categories such as buy, hold, or sell, reflecting their overall sentiment on the stock's potential. It’s important to consider these ratings in conjunction with your own research and analysis.

For further insights into KB Home's investors, you might find this resource helpful: Exploring KB Home (KBH) Investor Profile: Who’s Buying and Why?

In conclusion, assessing whether KB Home is overvalued or undervalued requires a holistic approach, considering various financial ratios, market trends, and expert opinions. The data presented here offers a starting point for investors to conduct their own due diligence.

KB Home (KBH) Risk Factors

Several factors, both internal and external, can significantly impact KB Home's (KBH) financial health. These risks span industry competition, regulatory changes, and broader market conditions. Understanding these potential challenges is crucial for investors.

Industry Competition: The homebuilding industry is highly competitive. KB Home (KBH) faces competition from national, regional, and local homebuilders. This competition can impact KB Home's (KBH) ability to acquire land, sell homes, and maintain profit margins. Changes in competitor strategies, such as aggressive pricing or innovative product offerings, could adversely affect KB Home's (KBH) market position.

Regulatory Changes: The homebuilding industry is subject to extensive regulations at the federal, state, and local levels. These regulations include building codes, environmental regulations, zoning laws, and land development restrictions. Changes in these regulations can increase KB Home's (KBH) costs, delay projects, and limit the availability of land for development. For example, stricter environmental regulations could require KB Home (KBH) to implement costly mitigation measures, reducing profitability.

Market Conditions: The demand for new homes is highly sensitive to economic conditions, such as interest rates, employment levels, consumer confidence, and housing affordability. Economic downturns or increases in interest rates can reduce demand for new homes, leading to lower sales volumes and prices. Additionally, fluctuations in the supply of existing homes can impact the demand for new construction. KB Home's (KBH) financial performance is closely tied to these macroeconomic factors.

Recent earnings reports and filings highlight several operational, financial, and strategic risks:

• Supply Chain Disruptions: Disruptions in the supply chain can lead to delays in construction and increased costs for materials and labor.
• Inflation: Rising inflation can increase the cost of land, materials, and labor, impacting profit margins.
• Interest Rate Volatility: Fluctuations in interest rates can impact both the demand for new homes and KB Home's (KBH) borrowing costs.
• Land Acquisition Risks: The availability and cost of suitable land for development can fluctuate, impacting KB Home's (KBH) ability to expand its operations.

To mitigate these risks, KB Home (KBH) may implement various strategies, such as:

• Diversifying its geographic footprint to reduce reliance on specific markets.
• Implementing cost-control measures to improve efficiency and profitability.
• Carefully managing its land inventory to ensure an adequate supply of land for future development.
• Offering a range of home designs and price points to appeal to a wide range of buyers.

Here's a look at potential mitigation strategies for key risks:

For further insights into KB Home's (KBH) values, see: Mission Statement, Vision, & Core Values of KB Home (KBH).

KB Home (KBH) Growth Opportunities

KB Home's potential for future growth is rooted in several strategic factors. These include product innovation, expansion into new markets, and the execution of strategic initiatives. These elements collectively contribute to revenue growth and improved earnings.

Key growth drivers for KB Home include:

• Product Innovation: KB Home focuses on designing homes that meet the evolving needs and preferences of homebuyers, including energy-efficient features and smart home technology.
• Market Expansion: The company strategically expands into high-growth markets, leveraging demographic trends and economic opportunities to increase its customer base.
• Strategic Initiatives: KB Home implements various strategic initiatives aimed at enhancing operational efficiency, reducing costs, and improving customer satisfaction.

KB Home's financial performance provides insight into its growth trajectory. For example, in 2024, KB Home reported total revenues of $6.42 billion. Looking ahead, analysts' estimates project continued revenue growth, driven by increased demand for new homes and the company's strategic initiatives.

Several strategic initiatives and partnerships could drive future growth for KB Home:

• Homebuilding Operations: KB Home designs and builds a wide range of new homes for first-time, move-up, and active adult homebuyers, including attached and detached single-family homes, townhomes, and condominiums.
• Financial Services: The company provides mortgage banking and title services to its homebuyers through its KBHS Home Loans, LLC joint venture.

KB Home possesses several competitive advantages that position it favorably for future growth:

• Built-to-Order Approach: KB Home's unique built-to-order approach allows buyers to personalize their homes, differentiating the company from competitors.
• Land Acquisition Strategies: The company employs disciplined land acquisition strategies, ensuring a steady supply of lots in desirable locations.
• Strong Brand Reputation: KB Home has established a strong brand reputation for quality, innovation, and customer service, attracting a loyal customer base.

To delve deeper into KB Home's overall financial picture, you might find this resource helpful: Breaking Down KB Home (KBH) Financial Health: Key Insights for Investors