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KBH Q3 Earnings & Revenues Beat Estimates, Both Decline Y/Y, Stock Up
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Key Takeaways
KB Home's Q3 EPS of $1.61 and revenues of $1.62B beat estimates but fell year over year.
Net orders dropped 4% y/y to 2,950, driving a 24% backlog decline and pricing pressure.
FY25 guidance was revised lower, with housing revenues now seen between $6.1 billion and $6.2 billion.
KB Home (KBH - Free Report) reported third-quarter fiscal 2025 results. The quarter’s earnings and total revenues surpassed the Zacks Consensus Estimate but decreased on a year-over-year basis.
The company’s quarterly results highlighted ongoing challenges in a difficult housing market, reflecting pricing pressures across key regions. Macroeconomic headwinds such as persistent cost inflation and the impact of tariffs on construction materials. In response to weaker demand and the shortfall in orders, management adopted a cautious stance and revised its fiscal 2025 housing revenue guidance downward.
However, KB Home is focused on expanding its build-to-order mix, reducing build times and enhancing customer satisfaction through affordable prices and personalization while maintaining strict cost controls. With a healthy balance sheet, significant cash flow and capital returns to shareholders, the company is positioning itself for improved margins and long-term growth once market conditions stabilize.
Following the earnings release, shares of KBH gained 2.5% during yesterday’s after-hours.
KBH’s Q3 Earnings & Revenue Discussion
The company reported adjusted earnings per share (EPS) of $1.61, beating the Zacks Consensus Estimate of $1.50 by 7.3%. In the year-ago quarter, it reported an adjusted EPS of $2.04.
Revenues of $1.62 billion also surpassed the consensus mark of $1.6 billion by 1.5% but decreased 7.4% year over year.
KB Homes’ Segmental Details
Homebuilding: The segment's revenues of $1.61 billion declined 7.6% from the prior-year quarter’s level of $1.75 billion. The number of homes delivered was 3,393 units, down 6.6% from the year-ago period’s level of 3,631 units. The reported figure was down from our projection of 3,409 units for the quarter. The average selling price (ASP) decreased 1.1% from a year ago to $475,700. Our model predicted deliveries’ ASP to be $476,200.
Net orders declined 4.4% from the prior year to 2,950 units. The value of net orders was also down to $1.31 billion from the year-ago quarter’s value of $1.54 billion. We projected orders to be 3,286 units or $1.62 billion for the fiscal third quarter. Absorption or monthly net orders per community decreased to 3.8 from 4.1 year over year.
The cancellation rate, as a percentage of gross orders, was 17% compared with 15% in the year-ago period.
The quarter-end backlog totaled 4,333 homes, down from the year-ago figure of 5,724 homes. Further, potential housing revenues from the backlog declined 31.9% from the prior-year period to $2 billion.
The average community count was up year over year by 3% to 259, and the ending community count was up 4% to 264.
Within homebuilding, the housing gross margin (excluding inventory-related charges) contracted 180 basis points (bps) year over year to 18.9%. The contraction was primarily driven by pricing reductions, higher relative land costs, and an unfavorable geographic mix, partially offset by lower construction expenses. Our model anticipated the housing gross margin to be 18.4% for the quarter.
In the quarter, selling, general, and administrative expenses (SG&A), as a percentage of housing revenues, contracted 20 bps to 10%, caused by decreased operating leverage.
Homebuilding operating margin (excluding inventory-related charges) was 8.8%, down from 10.9%. We expected the operating margin to be 7.9% for the reported quarter.
Financial Services: The segment's revenues declined 9.3% year over year to $6 million. The downtrend was due to lower insurance commission revenues and equity in the income of the company’s mortgage banking joint venture.
KB Home’s Financial Position
KB Home had homebuilding cash and cash equivalents of $330.6 million as of Aug. 31, 2025, down from $598 million reported at the end of fiscal 2024. The company had a total liquidity of $1.16 billion, including $831.7 million of available capacity under its revolving credit facility, with $250 million of cash borrowings outstanding.
As of the end of the third-quarter fiscal 2025, the debt-to-capital ratio was 33.2, up from 29.4 at the end of fiscal 2024.
For the nine months, KBH repurchased approximately 7.8 million shares of its outstanding common stock for $438.5 million (or $56.30 per share). As of Aug. 31, 2025, it had $261.5 million remaining under the repurchase authorization.
KB Home Slashes FY25 Guidance
For fiscal 2025, the company now expects housing revenues to be in the $6.1-$6.2 billion band (compared with prior expectations of $6.3-$6.5 billion). ASP is currently estimated to be approximately $483,000 compared to the previous range of $480,000 to $490,000. In fiscal 2024, KBH reported housing revenues of $6.9 billion with an ASP of $486,900.
Assuming no inventory-related charges, the housing gross margin is now expected to be between 19.2% and 19.3%, down from the prior range of 19.0% to 19.4%. Last year, the company reported a housing gross margin of 21%. Homebuilding's operating margin (assuming no inventory-related charges) is projected at approximately 8.9% compared to the prior expectation of 8.6-9.0%, indicating a decline from the 11.5% reported in fiscal 2024.
SG&A expenses, as a percentage of housing revenues, are now expected to be in the range of 10.2-10.3%, compared to the prior expected range of 10.2% to 10.6%. In fiscal 2024, SG&A expenses, as a percentage of housing revenues, were 10%.
It projects an effective tax rate of approximately 23% (the prior expectation was 24%). The company increased the ending community count to about 260 (prior expectation was 250).
KBH’s Zacks Rank & Key Picks
KB Home currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the Construction sector are Everus Construction Group Inc. (ECG - Free Report) , Tutor Perini Corporation (TPC - Free Report) and Great Lakes Dredge & Dock Corporation (GLDD - Free Report) .
Everus Construction Group presently sports a Zacks Rank #1 (Strong Buy). The company delivered a trailing four-quarter earnings surprise of 42.7%, on average. ECG stock has jumped 21.4% year to date. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for ECG’s 2025 sales and earnings per share (EPS) indicates growth of 18% and 3.9%, respectively, from the year-ago period’s levels.
Tutor Perini sports a Zacks Rank of 1 at present. The company delivered a trailing four-quarter earnings surprise of 387.2%, on average. Tutor Perini stock has soared 165.7% year to date.
The Zacks Consensus Estimate for Tutor Perini’s 2025 sales and EPS indicates growth of 21.2% and 220.8%, respectively, from the prior-year levels.
Great Lakes Dredge & Dock flaunts a Zacks Rank of 1 at present. The company delivered a trailing four-quarter earnings surprise of 45.3%, on average. Great Lakes Dredge & Dock stock has gained 5.3% year to date.
The Zacks Consensus Estimate for Great Lakes Dredge & Dock’s 2025 sales and EPS indicates growth of 9% and 21.4%, respectively, from the prior-year levels.
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KBH Q3 Earnings & Revenues Beat Estimates, Both Decline Y/Y, Stock Up
Key Takeaways
KB Home (KBH - Free Report) reported third-quarter fiscal 2025 results. The quarter’s earnings and total revenues surpassed the Zacks Consensus Estimate but decreased on a year-over-year basis.
The company’s quarterly results highlighted ongoing challenges in a difficult housing market, reflecting pricing pressures across key regions. Macroeconomic headwinds such as persistent cost inflation and the impact of tariffs on construction materials. In response to weaker demand and the shortfall in orders, management adopted a cautious stance and revised its fiscal 2025 housing revenue guidance downward.
However, KB Home is focused on expanding its build-to-order mix, reducing build times and enhancing customer satisfaction through affordable prices and personalization while maintaining strict cost controls. With a healthy balance sheet, significant cash flow and capital returns to shareholders, the company is positioning itself for improved margins and long-term growth once market conditions stabilize.
Following the earnings release, shares of KBH gained 2.5% during yesterday’s after-hours.
KBH’s Q3 Earnings & Revenue Discussion
The company reported adjusted earnings per share (EPS) of $1.61, beating the Zacks Consensus Estimate of $1.50 by 7.3%. In the year-ago quarter, it reported an adjusted EPS of $2.04.
Revenues of $1.62 billion also surpassed the consensus mark of $1.6 billion by 1.5% but decreased 7.4% year over year.
KB Homes’ Segmental Details
Homebuilding: The segment's revenues of $1.61 billion declined 7.6% from the prior-year quarter’s level of $1.75 billion. The number of homes delivered was 3,393 units, down 6.6% from the year-ago period’s level of 3,631 units. The reported figure was down from our projection of 3,409 units for the quarter. The average selling price (ASP) decreased 1.1% from a year ago to $475,700. Our model predicted deliveries’ ASP to be $476,200.
Net orders declined 4.4% from the prior year to 2,950 units. The value of net orders was also down to $1.31 billion from the year-ago quarter’s value of $1.54 billion. We projected orders to be 3,286 units or $1.62 billion for the fiscal third quarter. Absorption or monthly net orders per community decreased to 3.8 from 4.1 year over year.
The cancellation rate, as a percentage of gross orders, was 17% compared with 15% in the year-ago period.
The quarter-end backlog totaled 4,333 homes, down from the year-ago figure of 5,724 homes. Further, potential housing revenues from the backlog declined 31.9% from the prior-year period to $2 billion.
The average community count was up year over year by 3% to 259, and the ending community count was up 4% to 264.
Within homebuilding, the housing gross margin (excluding inventory-related charges) contracted 180 basis points (bps) year over year to 18.9%. The contraction was primarily driven by pricing reductions, higher relative land costs, and an unfavorable geographic mix, partially offset by lower construction expenses. Our model anticipated the housing gross margin to be 18.4% for the quarter.
In the quarter, selling, general, and administrative expenses (SG&A), as a percentage of housing revenues, contracted 20 bps to 10%, caused by decreased operating leverage.
Homebuilding operating margin (excluding inventory-related charges) was 8.8%, down from 10.9%. We expected the operating margin to be 7.9% for the reported quarter.
Financial Services: The segment's revenues declined 9.3% year over year to $6 million. The downtrend was due to lower insurance commission revenues and equity in the income of the company’s mortgage banking joint venture.
KB Home’s Financial Position
KB Home had homebuilding cash and cash equivalents of $330.6 million as of Aug. 31, 2025, down from $598 million reported at the end of fiscal 2024. The company had a total liquidity of $1.16 billion, including $831.7 million of available capacity under its revolving credit facility, with $250 million of cash borrowings outstanding.
As of the end of the third-quarter fiscal 2025, the debt-to-capital ratio was 33.2, up from 29.4 at the end of fiscal 2024.
For the nine months, KBH repurchased approximately 7.8 million shares of its outstanding common stock for $438.5 million (or $56.30 per share). As of Aug. 31, 2025, it had $261.5 million remaining under the repurchase authorization.
KB Home Slashes FY25 Guidance
For fiscal 2025, the company now expects housing revenues to be in the $6.1-$6.2 billion band (compared with prior expectations of $6.3-$6.5 billion). ASP is currently estimated to be approximately $483,000 compared to the previous range of $480,000 to $490,000. In fiscal 2024, KBH reported housing revenues of $6.9 billion with an ASP of $486,900.
Assuming no inventory-related charges, the housing gross margin is now expected to be between 19.2% and 19.3%, down from the prior range of 19.0% to 19.4%. Last year, the company reported a housing gross margin of 21%. Homebuilding's operating margin (assuming no inventory-related charges) is projected at approximately 8.9% compared to the prior expectation of 8.6-9.0%, indicating a decline from the 11.5% reported in fiscal 2024.
SG&A expenses, as a percentage of housing revenues, are now expected to be in the range of 10.2-10.3%, compared to the prior expected range of 10.2% to 10.6%. In fiscal 2024, SG&A expenses, as a percentage of housing revenues, were 10%.
It projects an effective tax rate of approximately 23% (the prior expectation was 24%). The company increased the ending community count to about 260 (prior expectation was 250).
KBH’s Zacks Rank & Key Picks
KB Home currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the Construction sector are Everus Construction Group Inc. (ECG - Free Report) , Tutor Perini Corporation (TPC - Free Report) and Great Lakes Dredge & Dock Corporation (GLDD - Free Report) .
Everus Construction Group presently sports a Zacks Rank #1 (Strong Buy). The company delivered a trailing four-quarter earnings surprise of 42.7%, on average. ECG stock has jumped 21.4% year to date. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for ECG’s 2025 sales and earnings per share (EPS) indicates growth of 18% and 3.9%, respectively, from the year-ago period’s levels.
Tutor Perini sports a Zacks Rank of 1 at present. The company delivered a trailing four-quarter earnings surprise of 387.2%, on average. Tutor Perini stock has soared 165.7% year to date.
The Zacks Consensus Estimate for Tutor Perini’s 2025 sales and EPS indicates growth of 21.2% and 220.8%, respectively, from the prior-year levels.
Great Lakes Dredge & Dock flaunts a Zacks Rank of 1 at present. The company delivered a trailing four-quarter earnings surprise of 45.3%, on average. Great Lakes Dredge & Dock stock has gained 5.3% year to date.
The Zacks Consensus Estimate for Great Lakes Dredge & Dock’s 2025 sales and EPS indicates growth of 9% and 21.4%, respectively, from the prior-year levels.