KB Home (NYSE: KBH), whose colleagues include D.R. Horton, Inc. (NYSE: DHI) and Lennar Corporation (NYSE: LEN), reported earnings for the third quarter on Friday, and as one might have expected, they weren't the stuff of Wall Street dreams. This article gives a nice summary of the release. The loss per share worsened like crazy during the quarter compared to the year-ago data. The loss this year was $1.87 per share, and that was about four times the amount lost in the year-ago period. One thing to keep in mind, however, is that, on a non-GAAP basis in the previous year, the loss was $6.19 per share. The disparity here was caused by the addition of gains from discontinued operations in Q3 2007. No matter, expectations were for $1.22 per share for the current quarter, so KB Home nevertheless missed by a wide margin.

What fascinates me about KB Home is how the stock rebounded from its intraday low. I expected to see the shares in the dumps as I began to write this piece. Interestingly enough, as of this writing, shares are actually up over 1%! I wasn't the only one to notice this phenomenon. Dividend.com also mentioned how interesting the strong price action has been. In fact, at the time of this writing, AOL Finance says that KB Home's stock is up over 16% for the three-month period and up over 20% for the one-month period. What is this telling me? Does this mean I should buy the stock? I also should point out that the stock is not languishing at the 52-week low, either.

Well, it would have been pretty scary to buy KB Home at the 52-week low. But, I say it is kind of scary to buy KB Home now. If you think there is strength with this stock, then I say, at the very least, you've got to wait until it comes down before even thinking of buying. I just can't get myself to consider this homebuilder after seeing it miss estimates. Plus, we aren't out of the bad housing slump yet. The price action does give me pause, and I concede that you have to consider the effect of the discontinued operations on last year's earnings number. Still, it is my opinion that staying away from KB Home is best for now. The final decision, however, is yours.

Disclosure: I don't own any company mentioned; positions can change at any time.