Standard&Poor's Ratings Services' rating on KB Home reflects large accumulated losses in recent years that eroded shareholder equity and contributed to the Los Angeles-based homebuilder's current highly leveraged financial profile. In our assessment, the company's business risk profile is fair, based on our expectations that home sales will remain weak through the first half of fiscal 2011, though volume will likely pick up somewhat in the latter half of the year after KB Home opens a substantial number of new communities. KB Home is one of the nation's largest homebuilders, having delivered 7,346 new homes during its fiscal year ended Nov. 30, 2010, at an average price of about $215,000. The company operates 232 communities in 30 metropolitan
