Value
6.7/10data confidence 83%| Component | Sub-score |
|---|---|
| P/E | 8.4 |
| P/S | 10.0 |
| EV/EBITDA | 3.5 |
| Fwd P/E | 8.7 |
| Analyst target | 4.0 |
- ▸Forward P/E: 12.9x
KBH · Why this verdict
Why KB Home (KBH) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
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VerdictSELL
Overall score4.3/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
KB Home displays excellent free cash flow conversion and a recent history of earnings beats, but the thesis is undermined by a 23% revenue decline, high short interest, a confirmed technical downtrend, and below-minimum business quality — collectively pointing to a deteriorating fundamental setup with unattractive reward-to-risk.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Revenue is falling 23% year-over-year — the data characterizes this as declining — driven by near-complete reliance on a single business line that accounts for roughly 99.6% of sales and concentrated exposure to first-time and first move-up buyers who are most sensitive to affordability pressures. Growth breakdown | Revenue growth turns positive and exceeds 5% year-over-year for 2 consecutive quarters. | →Stable |
| CounterA sharp revenue decline in homebuilding can reflect a deliberate strategy of rightsizing volume to preserve margins; if the company is prioritizing profitability over growth, earnings per share can stay resilient even as the top line contracts. | ||
Short interest stands at 18% of float — a level the data characterizes as elevated and justified — signaling that a substantial portion of market participants are positioned for further price weakness, and with earnings due in 7 days the risk of a volatile outcome is amplified. Risk breakdown | Short interest falls below 10% of float, indicating that bearish conviction has meaningfully abated. | ↓Deteriorating |
| CounterHigh short interest creates significant mechanical upside risk if the company delivers a positive earnings surprise in the imminent report; a short squeeze could push the stock sharply higher regardless of the underlying fundamental picture. | ||
Despite the revenue headwinds, the business is converting 121% of net income into free cash flow — a ratio that exceeds reported earnings — signaling genuine cash generativeness even in a difficult operating environment. Quality breakdown | FCF as a percentage of net income stays above 80% over the next two reporting periods. | →Stable |
| CounterStrong cash conversion alongside declining revenue often reflects working capital releases from winding down inventory rather than durable operating efficiency; if revenue and construction activity resume, cash conversion may revert sharply downward. | ||
The stock trades below its 200-day moving average with the moving average slope declining at negative 2.3% per 30 days, a death cross is confirmed, and on-balance volume is in distribution — a configuration that indicates sustained selling pressure with no near-term reversal signal. Momentum breakdown | Price rises above the 200-day moving average and on-balance volume turns positive for 4 consecutive weeks. | ↑Improving |
| CounterRSI at 66 and an improving MACD suggest short-term momentum is recovering within the broader downtrend; the imminent earnings report in 7 days could act as a catalyst to break the pattern if results surprise positively. | ||
Revenue is falling 23% year-over-year — the data characterizes this as declining — driven by near-complete reliance on a single business line that accounts for roughly 99.6% of sales and concentrated exposure to first-time and first move-up buyers who are most sensitive to affordability pressures.
→StableGrowth breakdown
- Expectation
- Revenue growth turns positive and exceeds 5% year-over-year for 2 consecutive quarters.
CounterA sharp revenue decline in homebuilding can reflect a deliberate strategy of rightsizing volume to preserve margins; if the company is prioritizing profitability over growth, earnings per share can stay resilient even as the top line contracts.
Short interest stands at 18% of float — a level the data characterizes as elevated and justified — signaling that a substantial portion of market participants are positioned for further price weakness, and with earnings due in 7 days the risk of a volatile outcome is amplified.
↓DeterioratingRisk breakdown
- Expectation
- Short interest falls below 10% of float, indicating that bearish conviction has meaningfully abated.
CounterHigh short interest creates significant mechanical upside risk if the company delivers a positive earnings surprise in the imminent report; a short squeeze could push the stock sharply higher regardless of the underlying fundamental picture.
Despite the revenue headwinds, the business is converting 121% of net income into free cash flow — a ratio that exceeds reported earnings — signaling genuine cash generativeness even in a difficult operating environment.
→StableQuality breakdown
- Expectation
- FCF as a percentage of net income stays above 80% over the next two reporting periods.
CounterStrong cash conversion alongside declining revenue often reflects working capital releases from winding down inventory rather than durable operating efficiency; if revenue and construction activity resume, cash conversion may revert sharply downward.
The stock trades below its 200-day moving average with the moving average slope declining at negative 2.3% per 30 days, a death cross is confirmed, and on-balance volume is in distribution — a configuration that indicates sustained selling pressure with no near-term reversal signal.
↑ImprovingMomentum breakdown
- Expectation
- Price rises above the 200-day moving average and on-balance volume turns positive for 4 consecutive weeks.
CounterRSI at 66 and an improving MACD suggest short-term momentum is recovering within the broader downtrend; the imminent earnings report in 7 days could act as a catalyst to break the pattern if results surprise positively.
Per-dimension breakdown
Quality
2.9/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 2.0 |
| ROA | 1.8 |
| Gross margin | 0.0 |
| Op margin | 2.4 |
| Net margin | 2.2 |
| Current ratio | 7.5 |
| FCF quality | 0.0 |
| Moat | 3.9 |
| Piotroski F | 6.7 |
- ▸Earnings quality RED FLAG: -12% FCF/NI
- ▸No competitive moat
- ▸Quality concerns
Growth
1.1/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 0.0 |
| EPS growth | 2.2 |
- ▸Declining revenue: -20%
Momentum
6.2/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 4.0 |
| Volume | 2.3 |
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA, MA slope -3.9%/30d — confirmed downtrend
Sentiment
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 6.3 |
| Analyst rating | 5.0 |
| Price target | 6.6 |
Insider
5.0/10data confidence 100%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| insider conviction | 2.0 |
| holder change | 6.4 |
| notable moves | 7.0 |
- ▸Modest insider selling — $1,520,120 (0.054% of mkt cap)
Peer rank
3.0/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 6.8 |
| quality rank | 2.7 |
| growth rank | 0.0 |
Technical
2.7/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 2.5 |
| support resistance | 1.9 |
| 52w position | 3.8 |
Risk (lower is worse)
5.1/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 0.9 |
| days to cover | 5.5 |
| volatility | 3.9 |
| put call | 8.7 |
| implied vol | 5.7 |
| max pain risk | 3.0 |
| beta | 5.7 |
| debt equity | 7.6 |
- ▸High short interest justified: 26%
- ▸Above max pain $25
- ▸Concentration risks: 2 HIGH, 2 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
5.4/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 3.3 |
| earnings timing | 5.0 |
| surprise avg | 4.2 |
| dividend safety | 6.7 |
| news activity | 8.0 |
- ▸Earnings concerns: 2B/2M
- ▸Yield trap warning: high yield but unsafe
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCK:QUALITY_FLOORPassed (6)
- MOMENTUM:6.2>=5.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:49d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-0.3=NEGATIVE
Warning (2)
- DEATH_CROSS:momentum=6.2>=5.0 recovering
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
-0.32
Upside
-3.6%
Downside
11.4%
Sizing output
AVOID
SetupRecovery — Death cross but MACD improving, RSI 57
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — Beta 1.34>1.3, MCap $2.8B<$5B
Investment implication
The SELL_IF_HOLDING verdict reflects the ASYMMETRY gate's -0.3=NEGATIVE outcome against Value at 6.7 and asymmetric R:R of -0.32.
The strongest dimensions are Value at 6.7, Momentum at 6.2, and Sentiment at 5.9; the weakest are Growth at 1.1, Technical at 2.7, and Quality at 2.9. The V9 engine flagged 1 failed gate with 2 warnings, producing an asymmetric reward-to-risk of -0.32 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Revenue Decline
Trip ifRevenue growth turns positive and exceeds 5% year-over-year for 2 consecutive quarters.
- P2High Short Interest
Trip ifShort interest falls below 10% of float.
- P3Strong Cash Conversion
Trip ifFCF as a percentage of net income falls below 50% for 2 consecutive reporting periods.
- P4Confirmed Technical Downtrend
Trip ifPrice rises above the 200-day moving average and on-balance volume turns positive for 4 consecutive weeks.