Opinions
Jim Cramer - Mad Money
KB Home
KBH-N
DON'T BUY
Sep 19, 2025
$63.940
Stock price when the opinion was issued
contractors
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PAST TOP PICK
(A Top Pick Nov 18/21, Down 12.8%)Stockchase Research Editor: Michael O’Reilly Our PAST TOP PICK with KBH has triggered its stop at $38. To remain disciplined, we recommend covering the position at this time. This will result in a net investment loss of 10%, when combined with the previous buy recommendation.
contractors
COMMENT
An analyst downgraded it today. The averaging selling prices for homes remain great, says the company, without signs of slowing. Q1 revenues were up 23% but slightly missed estimates. It's down nearly 10% in the past week. They fell short on the top and bottom lines. However, they have a very strong backlog to fulfill and management maintained their full-year forecast as the company expects higher prices. It now trades at a big discount to book value. Instead of buying back shares (at low share prices), the company would rather buy more homes. The homebuilders are cyclicals . Also, can they execute? Supply china shortages are a problem.
contractors
COMMENT
Home demand will remain strong will at least the end of the year, though skyrocketing labour and materials costs like lumber and metals are a a problem. Last week, KBH reported a disappointing quarter, though management raised parts of guidance. The averaging selling prices for homes (and demand) remain great, says the company, without signs of slowing. It trades at only 3.3x this year's earnings, so it could be a bargain. Q1 revenues were up 23% but slightly missed estimates. They reported great numbers in California. Shares are down nearly 10% in the past week after they fell short on the top and bottom lines last week. However, they have a very strong backlog to fulfill, and management maintained their full-year margin forecast as the company expects higher home prices. The CEO says their biggest challenge is completing homes. Shares now trade at a big discount to book value. If they start buying back stocks, he's in, but if not, he's on the sidelines.
contractors
WATCH
They report Tuesday. Housing the linchpin of the economy and prices keep climbing. We need to hear if they will build more homes or keep the supply so tight that housing prices won't come down. The buildings are limiting supply to keep gross margins up and prices up, but it's terrible to fight inflation. Housing stocks have hung up because we have a housing shortage, but how long can this last when we see pushback on the prices of other items like dining out, apparel and airline tickets, all of which have risen dramatically in the last 5 years.
contractors
DON'T BUY
They report Wednesday and he expects the same result at Lennar which got hit hard today (gross margin pressure and stubbornly high mortgage rates). Homebuilding stocks won't see relief until the Fed says it is not worried about inflation and the Fed funds rate falls to 2-2.5%. Don't trade this.