3 Reasons to Avoid KBH and 1 Stock to Buy Instead

Core Viewpoint - KB Home has experienced a 12.6% increase in stock price over the last six months, but this is significantly lower than the S&P 500's 19.5% return during the same period, raising concerns among investors about its future performance [1] Group 1: Backlog and Orders - KB Home's backlog is reported at $1.99 billion, with an average decline of 20.4% year-on-year over the last two years, indicating a lack of new orders and potential market saturation [4][3] Group 2: Return on Invested Capital (ROIC) - The company's ROIC has been declining, suggesting fewer profitable growth opportunities, despite previous management efforts that were well-regarded [6][5] Group 3: Debt Levels - KB Home has a debt level of $3.89 billion, which is significantly higher than its cash reserves of $330.6 million, resulting in a 5× net-debt-to-EBITDA ratio based on an EBITDA of $671.8 million over the last 12 months, indicating over-leverage [8][7]