KB Home (KBH) Stock Forecast & Price Target

KB Home is positioned for earnings growth that can outpace revenue, with FY28 EPS estimated at $4.50, up 22% y/y, on revenue of $5.5 billion, up 7% y/y, helped by 3 million annual share buybacks and a projected gross margin rebound to 16.6%. Its build-to-order model, emphasis on first-time and move-up buyers, and ability to capture option upsells support unit margins, while the 3Q'26 beat showed strength in gross margin, gain on sale/JV income, interest income, and financial services. The company also has visible operating momentum with orders expected to rise 6% y/y to 12.4k, closings up 4% y/y to 11.3k homes, and communities up 6% y/y to 300, while sustainability leadership and a >45-market footprint add long-term appeal.

KB Home is facing a negative fundamental setup as higher mortgage rates, tighter affordability, and rising existing-home inventories have weakened traffic, orders, and pricing, with July and August traffic sequentially lower and 3Q'26 orders down 12% year over year to 2,604. Its revenue and profitability outlook also softened, as FY26 housing revenue was cut to $4.9 billion to $5.1 billion and gross margin is expected to fall to 16.3% from 16.8% in 3Q, reflecting a less profitable mix, higher land costs, and competitive pressure. Balance-sheet quality adds concern because the company is still returning capital while leverage has risen above 50% debt-to-equity and cash fell to $159 million, the lowest in over 20 years.