Our ratings on KB Home reflect large accumulated losses in recent years that eroded shareholder equity and contributed to the homebuilder's current highly leveraged financial profile. Our fair business risk assessment reflects our view that KB Homes' solid market position in certain key metropolitan areas and its well-designed entry level homes are long-term competitive advantages. However, we expect that the company's narrow focus on the currently credit-constrained first-time homebuyer will temper sales growth in the near term--despite an aggressive drive to open new communities. KB Home is one of the nation's largest homebuilders, having delivered 6,969 new homes during the 12 months ended Feb. 28, 2011, at an estimated average price of about $215,000. The company operates in 30 metropolitan
