Homebuilding - Weekly Coverage Update 7.6.2026 With A Few Words On Valuation

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Homebuilding - Weekly Coverage Update 7.6.2026 With A Few Words On Valuation

Truist Securities

KBH: Valuation and Risks

Our $56 price target is derived from a 11.3x multiple applied to our 2027 EPS estimate and a 0.9x P/B multiple. We calculated our target

multiples by applying our regression analysis on the broader builder group to establish what we believe is a fair value P/B based on current

ROE projections. Note that our target P/B is below the company's 10-yr average.

Upside risks to our rating and price target include an easier land environment that would allow KBH to return more capital than our current

projections. Downside risks to our price target and rating include a meaningful deterioration in the US housing market, political pressure

to flood the market with supply and thus pressuring home prices, and also a tough land environment that would make it more difficult

to efficiently allocate capital.

LEN: Valuation and Risks

Our $90 price target is derived from an 11.7x multiple applied to our 2027 EPS estimate and a 1.0x P/B multiple. Our target multiples are

derived from a regression analysis on the broader homebuilder group to calculate what we think are fair value multiples for LEN. We are

no longer assuming LEN will receive a P/B premium.

Risks to our price target and rating include a meaningful deterioration in the US housing market, political pressure to flood the market

with supply and thus pressuring home prices, and also a tough land environment. Upside risks include a notably better than we expect

housing market in 2026, which could boost revenue and earnings for LEN. Additionally, our balance sheet projections could be materially

under or overestimating actual ROE.

MTH: Valuation and Risks