KBH
KB Home
$49.16
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Undervalued
Trading 61.2% below fair value
You pay
$49.16
Bear
$98.42
Fair
$126.54
Bull
$154.66
Bear
$98.42
+100.2%
$7.03 × 14x
Fair
$126.54
+157.4%
$7.03 × 18x
Bull
$154.66
+214.6%
$7.03 × 22x
Adjust Assumptions
18.0x
7.03$
Key Value Driver
Through-cycle normalized EPS ($7.03)
Implied Market Multiple
7.0x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (44 analysts)
$58.80
Divergence from AlphaVal
115%
Summary
Using 7-year normalized EPS of $7.03 at a 18x cycle multiple, the base-case value is $126.54 per share. P/TBV cross-check: 0.8x.
Warnings
This company has a built-in lending arm whose debt is mixed in with the main business. We capped the debt adjustment to avoid overstating what the core business owes.
Wall Street's average price target is $58.80 (from 44 analysts). Our estimate is 115% above the consensus -- consider that gap carefully.
Key Risks
- Standard 10-year DCF produces unreliable terminal values for cyclicals
- 'Cheap' P/E at cycle peak is the most common value trap — normalize first
- Captive finance subsidiaries have different risk profiles from manufacturing