Is KB Home overvalued or undervalued?

As of 14 November 2025, the valuation grade for KB Home has moved from expensive to very expensive, indicating a significant shift in its perceived value. Based on the current metrics, KB Home appears overvalued, particularly when considering its P/E ratio of 7, which is lower than the industry average, and an EV to EBITDA ratio of 7.43. Additionally, the PEG ratio stands at 0.77, suggesting that the stock may not be priced appropriately relative to its growth expectations.
In comparison to its peers, KB Home's P/E ratio of 9.75 is lower than that of Toll Brothers, Inc. at 11.10 and Taylor Morrison Home Corp. at 10.67, both of which are considered fairly valued. The company's recent stock performance has been underwhelming, with a year-to-date return of -8.46%, significantly lagging behind the S&P 500's return of 14.49% during the same period. This underperformance reinforces the notion that KB Home is currently overvalued in the market.