What Happened?
Shares of homebuilder KB Home (NYSE:KBH) fell 8.8% in the morning session after the company reported fourth-quarter results that beat expectations but provided a weak outlook for 2026.
Although the company's earnings and revenue for the quarter surpassed Wall Street forecasts, the positive news was overshadowed by concerning trends. The company reported continued year-over-year declines in revenue and profit, and its backlog of future homes to be built also fell short of estimates. In response to the report, analysts at firms like Evercore ISI and Wolfe Research lowered their price targets on the stock.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy KB Home? Access our full analysis report here.
What Is The Market Telling Us
KB Home’s shares are somewhat volatile and have had 10 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 28 days ago when the stock gained 7.2% on the news that the company announced the grand opening of several new home communities across California, Arizona, and Florida.
The homebuilder revealed two new communities in Roseville, California, with prices starting from the low $600,000s. Additionally, KB Home opened a new community in San Tan Valley, Arizona, and another in St. Cloud, Florida, with homes in both locations priced from the low $300,000s. These openings in desirable locations suggested an expansion of the company's footprint. The announcements pointed to the company's efforts to grow its presence in key housing markets, which investors viewed favorably.
KB Home is down 11.9% since the beginning of the year, and at $56.97 per share, it is trading 18.7% below its 52-week high of $70.05 from January 2025. Investors who bought $1,000 worth of KB Home’s shares 5 years ago would now be looking at an investment worth $1,626.
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