Though earnings for homebuilder KB Home (NYSE:KBH) declined precipitously for its February quarter, the company did manage to best the even-more-pathetic expectations of Wall Street analysts. KB's CEO also took some time last quarter to remind everyone just how lousy the environment is for homebuilders -- a pretty standard speech from the sector these days. With conditions in the real estate market still looking pretty bleak, KB is getting ready to report its second-quarter earnings.

After the earnings are released on Thursday, we'll have plenty of data to dig into. But before that happens, let's step back and take a look at what investors think about KB as a long-term investment. To gain this insight, I've tapped into Motley Fool CAPS, where more than 30,000 investors have joined together to offer their thoughts on more than 4,700 companies, KB among them. Here's what Fools have to say about the company.

Up or down?
From the 350 investors that have weighed in on KB, the outlook is ugly.

Out of a possible five stars, KB snagged just one. Just slightly more than 50% of all players who have weighed in on the company have been bullish on it. When it comes to the CAPS All-Stars -- those investors in the top 20% of all CAPS players -- it's much worse, with less than a third of that group approving of the stock.

Among comparables, KB finds itself among some similarly out-of-favor stocks.


CAPS Rating

Centex (NYSE:CTX)


DR Horton (NYSE:DHI)


Hovnanian (NYSE:HOV)


KB Home


Lennar (NYSE:LEN)


Pulte Homes (NYSE:PHM)


Toll Brothers (NYSE:TOL)


Wall Street vs. Main Street
By and large, Wall Street has taken a "wait and see" approach on KB. Of the 10 analysts following the stock, eight of them have recommended that investors hold on to their KB stock. Two rebels have stuck their necks out for KB and said investors should be buying, and there isn't a single one calling it a sell.

The stock itself has trailed the S&P 500 miserably over the past year. The underperformance is even worse when we look out a little further -- between the summer of 2005 and now, the stock has shed more than 50% of its price.

Bull pitch
CAPS player bdava50 recently stuck up for the stock:

Subprime worries blah, blah, blah. Certainly home sales are down, but they're down from unprecedented levels in this country's history. A wall of worry is built into this sector and that's what drives markets higher. Technically there's a possible 10% downside, but looking out a year or so I see this in the $59-60 area. Certainly not beyond the realm of possibilities with a float that's 24% short and all those panicked buyers built in if something should turn positive.

Bear pitch
On the bear side, CAPS All-Star sleepyseth thinks that KB isn't ready to bounce quite yet:

This stock is heading lower, along with the entire housing sector. The market is nowhere near the bottom. I think that most experts who are calling a bottom now, remember the heady gains we just experienced in the housing market and want to be crowned geniuses for picking (guessing) a bottom in the market. ... With all of this bad news, you would think that real estate prices would have declined significantly, but they haven't. Many markets are down only a couple of percent, if they are down at all. They certainly have further to go down before they come back up.

The Foolish last word
While investing isn't always easy to begin with, calling a bottom in any market can be downright impossible. With that said, judging by the second-quarter earnings report from Lennar, it looks like the homebuilding market has not regained its footing yet. This week's earnings report from KB should give investors a better idea about whether the company is bucking the trend, or still stuck in the doldrums with the rest.

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Fool contributor Matt Koppenheffer does not own shares of any of the companies mentioned. The Fool's disclosure policy had a page on MySpace, but became way too popular and ended up spending all of its time updating its photos.