Is KB Home overvalued or undervalued?

As of 14 November 2025, KB Home's valuation grade has moved from expensive to very expensive, indicating a significant shift in its market perception. The company is currently overvalued, as evidenced by its P/E ratio of 7, which is below the industry average, and an EV to EBITDA ratio of 7.43, suggesting that despite its low valuation metrics, the market is pricing it at a premium compared to its peers. Additionally, the PEG ratio stands at 0.77, further highlighting the disparity between growth expectations and current valuation.
In comparison to its peers, Toll Brothers, Inc. has a P/E ratio of 11.10 and an EV to EBITDA of 9.45, while Taylor Morrison Home Corp. shows a P/E of 10.67 and an EV to EBITDA of 8.98, both indicating that KB Home is lagging behind in terms of valuation metrics. Notably, KB Home's stock has underperformed against the S&P 500, with a year-to-date return of -8.46% compared to the index's 14.49%, reinforcing the notion that the stock is currently overvalued.