Value
6.5/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 8.3 |
| P/S | 9.9 |
| EV/EBITDA | 4.3 |
| Fwd P/E | 8.8 |
| PEG | 4.9 |
| Analyst target | 4.0 |
- ▸Forward P/E: 12.6x
- ▸PEG: 1.60
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.
Show full disclosure ▾Hide full disclosure ▴
About TrendMatrix. TrendMatrix is a publisher of general securities research and market commentary. We publish on a regular schedule. All content is the same for every subscriber in a tier — we do not provide personalized investment advice and we do not take into account any individual subscriber's financial situation, investment objectives, risk tolerance, tax situation, or holdings.
Not investment advice. TrendMatrix is not a registered investment adviser. Our content is for informational and educational purposes only. Consult your own licensed investment adviser, broker, or tax professional before making any investment decision.
Conflicts and positions. The TrendMatrix editorial team frequently holds personal long-term positions in securities discussed. We disclose positions held at the time of publication on each piece. We maintain a trading-window policy: we do not initiate or close positions in the same direction as a TrendMatrix publication within 24 hours before or 72 hours after publication.
No paid promotion. TrendMatrix does not accept payment from any issuer, broker, or third party in exchange for coverage of any security. Our sole compensation is subscription revenue.
No fiduciary duty. No fiduciary, advisory, or agency relationship is created between you and TrendMatrix by reading our content or subscribing to our service.
Performance. Past performance is not indicative of future results. Performance figures reflect the published model only and do not reflect any individual subscriber's actual results.
VerdictSELL
Overall score4.5/10
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. | ↑Improving |
| 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. | ↑Improving |
| 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.
↑ImprovingRisk 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.
↑ImprovingQuality 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
3.9/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 2.3 |
| ROA | 2.3 |
| Gross margin | 0.0 |
| Op margin | 1.5 |
| Net margin | 2.5 |
| Current ratio | 7.4 |
| FCF quality | 7.8 |
| Moat | 3.9 |
| Piotroski F | 7.8 |
- ▸No competitive moat
- ▸Strong Piotroski F-Score: 7/9
Growth
1.8/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 0.0 |
| EPS growth | 3.6 |
- ▸Declining revenue: -27%
Momentum
2.3/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.0 |
| MACD | 0.0 |
| OBV | 4.7 |
| MA position | 3.0 |
| Volume | 0.9 |
- ▸Capitulation risk (RSI 25, below 200MA)
- ▸Below 200-MA, MA slope -1.8%/30d — confirmed downtrend
Sentiment
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 5.5 |
| Analyst rating | 5.0 |
| Price target | 6.0 |
Insider
6.7/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 10.0 |
| notable moves | 5.0 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
- ▸Institutions accumulating
Peer rank
2.8/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 5.6 |
| quality rank | 2.4 |
| growth rank | 0.5 |
Technical
7.1/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 7.5 |
| support resistance | 7.7 |
| 52w position | 6.2 |
Risk (lower is worse)
5.0/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 1.4 |
| days to cover | 6.0 |
| volatility | 3.3 |
| beta | 5.7 |
| debt equity | 7.8 |
| news risk | 6.0 |
- ▸High short interest justified: 21%
- ▸Concentration risks: 2 HIGH, 2 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
5.7/10data confidence 75%| Component | Sub-score |
|---|---|
| erm | 3.5 |
| dividend safety | 8.5 |
| news activity | 5.0 |
- ▸Dividend aristocrat: 1.8% yield
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCK:QUALITY_FLOORPassed (5)
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:NO_DATE
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (3)
- MOMENTUM:2.3<4.5
- ASYMMETRY:-0.9=NEGATIVE
- DEATH_CROSS:HARD_BLOCK
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
-0.93
Upside
-6.8%
Downside
7.4%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — Beta 1.33>1.3, MCap $3.4B<$5B
Investment implication
The SELL_IF_HOLDING verdict reflects the MOMENTUM gate's 2.3<4.5 outcome against Technical at 7.1 and asymmetric R:R of -0.93.
The strongest dimensions are Technical at 7.1, Insider at 6.7, and Value at 6.5; the weakest are Growth at 1.8, Momentum at 2.3, and Peer rank at 2.8. The V9 engine flagged 3 failed gates with 1 warning, producing an asymmetric reward-to-risk of -0.93 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.