NEW YORK (TheStreet) -- Shares of KB Home (KBH) , one of the largest homebuilders in the U.S., are getting hammered Tuesday. Should you be buying?

Shares, at $14, are down 14% on the year and 14% on the day. Shares are being punished despite reporting fourth-quarter revenue that topped analyst estimates and earnings that beat estimates by a huge margin.

Helped by higher volumes and higher average selling prices, the Los Angeles company increased revenue 29% year over year to $796 million, beating estimates of $778.5 million. 

When factoring in an income tax benefit of $824.2 million, KB said its earnings reached $852.8 million, or $8.36 per share. But take out that benefit and EPS was 28 cents, missing analysts' estimates of 56 cents per share, according to Thomson Reuters. That seems to have spooked investors.

Is this an overreaction or a buying opportunity? The potential reward is hard to ignore, given that KB is now operating in an economic environment that continues to improve.

Count Eli Hackel, analyst at Goldman Sachs, in the opportunity camp. In a recent report on the homebuilding industry he said he is bullish for the long term on companies "with attractive geographic exposures" that are "outperformers combined with strong capital allocation and timing of land purchases."

KB is one stock he mentioned along with Lennar (LEN) and Meritage Homes (MTH) . These companies had "the highest momentum from September to November" -- referring to year-over-year sales trends. 

Still, Meritage Homes is off 4.1% Tuesday while and Lennar is down more than 2%. Lennar reports earnings Thursday.

For KB, however, analysts may have to rethink their projections. The extent of Tuesday adjusted earnings miss is likely to spark some downgrades and lowered expectations for the coming fiscal year. 

But for value investors the stock has an average 12-month price target of $18, suggesting gains of 24%. What's important to note here is that KB is now trading below its lowest target of $15. As long as the shares stay above their 52-week low of $13.75, the $14 area may serve as a floor. But it's risky.

At the same time, with the company delivering 2,229 homes during the quarter (up 9% year over year) and with a 17% year-over-year jump in average selling prices, I would be buying on this dip and bet that the company turns things around.

Follow @Richard_WSPB

TheStreet Ratings team rates KB HOME as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate KB HOME (KBH) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income, reasonable valuation levels and notable return on equity. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

You can view the full analysis from the report here: KBH Ratings Report

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.