DRZ Investment Advisors Initiated a Position in KB Home. Is the Stock a Buy?

What happened

According to a filing with the Securities and Exchange Commission dated October 17, 2025, DePrince Race & Zollo Inc., also known as DRZ Investment Advisors, disclosed a new ownership stake in KB Home (NYSE:KBH). The fund reported holding 931,823 shares valued at $59.30 million as of September 30, 2025.

This position was established during the third quarter. The fund has 183 total reportable holdings, and KB Home is outside its top five positions.

What else to know

This new position accounts for 1.19% of DRZ's reportable U.S. equity assets under management as of September 30, 2025.

Top holdings after the filing:

• NYSE:ENS: $117.80 million (2.4% of AUM) as of September 30, 2025
• NYSE:BC: $117.12 million (2.3% of AUM) as of September 30, 2025
• NASDAQ:NWL: $97.84 million (2.0% of AUM) as of September 30, 2025
• NASDAQ:PCH: $94.51 million (1.9% of AUM) as of September 30, 2025
• NYSE:PRGO: $78.72 million (1.6% of AUM) as of September 30, 2025

As of October 16, 2025, KB Home shares were priced at $61.32, down 27.27% over the past year, with a negative one-year alpha of 19.42 percentage points versus the S&P 500.

Company Overview

Company Snapshot

KB Home is a U.S. homebuilder operating across multiple regions. The company leverages a customer-centric approach by offering a range of home designs and personalized options, supported by integrated financial services. It focuses on first-time and move-up buyers.

IMAGE SOURCE: GETTY IMAGES.

KB Home generates revenue primarily through the construction and sale of single-family homes, townhomes, and condominiums, with additional income from financial services, such as insurance and title services.

Its primary customers are first-time, first move-up, second move-up, and active adult homebuyers across key markets in the United States, including California, Texas, and Florida. The company operates in multiple U.S. regions and offers a range of home designs and personalized options to meet diverse buyer needs.

Foolish take

DRZ Investment Advisors initiating a stake in KB Home merits attention. It's an indication that the financial management company sees upside potential in the stock.

KB Home shares are well off the 52-week high of $85.92 reached last October, and it's understandable why. In the company's fiscal third quarter ended Aug. 31, revenue totaled $1.62 billion, down from $1.75 billion in the prior year.

In addition, KB Home estimates housing revenue for the fiscal year to come in between $6.1 billion to $6.2 billion. That's a decline from the previous fiscal year's $6.9 billion.

However, the Federal Reserve is expected to cut interest rates soon, and that can boost home sales. This possibility may be a factor leading to DRZ's stake in KB Home at this time.

The company is also repurchasing its stock, a sign of management's confidence in KB Home's future. It repurchased $188.5 million shares in fiscal Q3, and a total of about 11% of shares outstanding through the first three quarters of its fiscal year.

The potential for KB Home to see sales upside in the coming months as home buying activity is spurred by a rate cut, and its attractive dividend, yielding 1.6%, are factors to explain DRZ's buy. And these reasons are why KB Home looks like a compelling stock to invest in.

Glossary

13F assets under management: The total value of U.S. equity securities managed by an institutional investment manager, as reported in SEC Form 13F.
Alpha: A measure of an investment's performance relative to a benchmark index, indicating value added or subtracted by active management.
Reportable holdings: Securities positions that institutional investment managers must disclose in regulatory filings, typically based on size or type.
Dividend yield: The annual dividend payment expressed as a percentage of a stock's current price.
Top holdings: The largest investments in a fund's portfolio, usually ranked by market value or portfolio weight.
Stake: The amount of ownership or shares held in a company by an investor or institution.
Quarter ended: The last day of a three-month financial reporting period, used for performance and valuation calculations.
First move-up buyer: A homebuyer purchasing a larger or more expensive home after owning a starter home.
Active adult homebuyers: Individuals, often aged 55 and older, seeking homes in communities designed for active lifestyles.
Personalized options: Customizable features or upgrades offered to buyers to tailor a product, such as a home, to their preferences.
Integrated financial services: A suite of financial products, like mortgages and insurance, offered alongside a company's main business.
TTM: The 12-month period ending with the most recent quarterly report.

Robert Izquierdo has no position in any of the stocks mentioned. The Motley Fool recommends Brunswick and KB Home and recommends the following options: short October 2025 $65 calls on KB Home. The Motley Fool has a disclosure policy.