KB Home Can See ~30% Upside Over The Next 12 To 18 Months As Build-To-Order Headwinds Turn Into Tailwinds (NYSE:KBH)
KB Home (KBH) is an entry level homebuilder with ~55% of its deliveries to first-time home buyers, ~22% of its deliveries to first move-up buyers and rest 23% to second move-up and active adult buyers combined.
While most of the homebuilders are making new highs post Covid-19 and entry level homebuilders are outperforming the industry, KB Home is still trading ~11% below its February 2020 highs. The company reported an impressive net order growth for July at 23%, but it was still much lower than over 50% yoy growth which other entry level homebuilders like Meritage Homes (MTH), DR Horton (DHI) are reporting. Hence, its stock price is lagging its peers.
The key reason behind this underperformance is the company’s Built-to-Order™ approach. KB Home provides each of its homebuyers with a highly personalized experience where they can make a wide range of structural and design choices for their