Is KB Home overvalued or undervalued?

As of 9 September 2025, the valuation grade for KB Home has moved from very expensive to expensive, indicating a shift towards a less favorable valuation outlook. The company appears to be overvalued based on its current metrics, including a P/E ratio of 7, which is significantly lower than the peer average of approximately 10.5, and an EV to EBITDA ratio of 7.43 compared to the peer average of around 9.65. Additionally, the PEG ratio stands at 0.77, suggesting that the stock may not be justified at its current price given its growth prospects.
In comparison to its peers, Toll Brothers, Inc. has a P/E of 11.10 and an EV to EBITDA of 9.45, while Taylor Morrison Home Corp. shows a more attractive valuation with a P/E of 10.67 and an EV to EBITDA of 8.98. The recent stock performance of KB Home has been underwhelming, with a 1-year return of -24.95%, contrasting sharply with the S&P 500's return of 17.14% over the same period, reinforcing the notion that the stock is currently overvalued.