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KB Home Q1 Earnings Meet Estimates, Revenues Miss, Both Down Y/Y
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Key Takeaways
KB Home posted Q1 EPS in line with estimates, but revenues missed, and both declined Y/Y.
KBH cut FY26 delivery and revenue guidance after net orders missed levels needed to sustain the outlook.
Homebuilding revenues fell 22.7%, with lower deliveries, ASP decline and margin contraction to 15.5%.
KB Home (KBH - Free Report) reported first-quarter fiscal 2026 results. The quarter’s earnings came in line with the Zacks Consensus Estimate, while total revenues missed the same. Both metrics decreased on a year-over-year basis.
KB Home’s fiscal first-quarter performance reflects that the company is navigating a complex macroeconomic landscape while executing a deliberate strategic pivot. The recent escalation of conflict in the Middle East has added a further layer of uncertainty to an already cautious demand environment. Against this backdrop, and given that fiscal first-quarter net orders fell short of the level required to sustain its prior full-year delivery guidance, the company has revised its delivery outlook downward for the year.
KBH’s quarterly performance was supported by a strategic pivot back to its core built-to-order (BTO) model, alongside strong execution and disciplined operations. Results were further reinforced by an expansion in community count to the highest level in several years, which helped sustain sales activity, as well as a continued focus on managing direct costs efficiently. In addition, performance benefited from a high-quality buyer base, reflected in solid credit profiles and a notably low cancellation rate — the lowest recorded in recent years.
Following the earnings release, KBH stock declined 2.7% during yesterday’s after-hours.
KBH’s Q1 Earnings & Revenue Discussion
The company reported adjusted earnings of 52 cents per share, in line with the Zacks Consensus Estimate. In the year-ago quarter, it reported an adjusted EPS of $1.49.
Total revenues of $1.08 billion missed the consensus mark of $1.1 billion by 2% and decreased 22.6% year over year.
KB Homes’ Segmental Details
Homebuilding: The segment's revenues of $1.07 billion declined 22.7% from the prior-year quarter’s level of $1.39 billion. The number of homes delivered was 2,370 units, down 14% from the year-ago period’s level of 2,770 units. The reported figure was down from our projection of 2,385 units for the quarter. The average selling price (ASP) decreased 9.7% from a year ago to $452,100. Our model predicted deliveries’ ASP to be $461,600.
Net orders increased 3% from the prior year to 2,846 units. The value of net orders was also up to $1.36 billion from the year-ago quarter’s value of $1.35 billion. We projected net orders to be 2,883 units or $1.36 billion for the fiscal first quarter. Absorption or monthly net orders per community decreased to 3.5 from 3.6 year over year.
The cancellation rate, as a percentage of gross orders, was 12% compared with 16% in the year-ago period.
The quarter-end backlog totaled 3,604 homes, down from the year-ago figure of 4,436 homes. Further, potential housing revenues from the backlog declined 22.7% from the prior-year period to $1.7 billion.
The average community count was up year over year by 7% to 274, and the ending community count was up 8% to 276.
Within homebuilding, the housing gross margin (excluding inventory-related charges) contracted 480 basis points (bps) year over year to 15.5%. The contraction was primarily driven by pricing reductions, higher relative land costs, an unfavorable geographic mix and reduced operating leverage. Our model anticipated the housing gross margin to be at exactly 15.5% for the quarter.
In the quarter, selling, general and administrative expenses (SG&A), as a percentage of housing revenues, expanded 120 bps to 12.2%.
Homebuilding operating margin was 3.1%, down from 9.2%. We expected the operating margin to be 2.9% for the reported quarter.
Financial Services: The segment's revenues increased 4.6% year over year to $5 million. The pre-tax income was $5.5 million, down 26.7% from a year ago. The downturn reflected reduced equity income from the mortgage banking joint venture, partly offset by increased insurance commission revenues.
KB Home’s Financial Position
KB Home had homebuilding cash and cash equivalents of $200.5 million as of Feb. 28, 2026, down from $228.6 million reported at the end of fiscal 2025. The company had a total liquidity of $1.2 billion, including approximately $1 billion of available capacity under its revolving credit facility, with $200 million of cash borrowings outstanding.
As of the end of first-quarter fiscal 2026, the debt-to-capital was 32.9%, up from 30.3% at the end of fiscal 2025.
In the fiscal first quarter of 2026, KBH repurchased approximately 0.8 million shares of its outstanding common stock for $50 million. As of Feb. 28, 2026, it had $850 million remaining under the repurchase authorization.
KB Home Unveils Q2 Guidance
For the second quarter of fiscal 2026, the company is expecting housing revenues to be in the $1.05-$1.15 billion band, down from $1.52 billion reported in the year-ago period. It expects deliveries to be in the range of 2,250-2,450 homes compared with 3,120 homes delivered in the year-ago period.
Assuming no inventory-related charges, the housing gross profit margin is expected to be between 15% and 15.6%, down from 19.7% reported in the year-ago period. SG&A expenses, as a percentage of housing revenues, are expected to be in the range of 12.4% to 13%, compared with 10.7% reported in the year-ago period.
KBH projects an effective tax rate of approximately 19%.
FY26 Guidance Lowered by KBH
For fiscal 2026, KB Home is expecting deliveries to be in the range of 10,000 to 11,500 homes, down from the prior expectation of 11,000-12,500 homes. The company is expecting housing revenues to be in the range of $4.8-$5.5 billion, also down from the previous expectation range of $5.1-$6.1 billion.
KBH’s Zacks Rank & Key Picks
KB Home currently carries a Zacks Rank #4 (Sell).
Some top-ranked stocks from the Construction sector are:
Comfort Systems USA, Inc. (FIX - Free Report) flaunts a Zacks Rank #1 (Strong Buy) at present. The company delivered a trailing four-quarter earnings surprise of 35.2%, on average. FIX stock has surged 86.9% in the past six months. You can seethe complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Comfort Systems’ fiscal 2026 sales and EPS indicates growth of 20.3% and 26.7%, respectively, from the prior-year levels.
Fluor Corporation (FLR - Free Report) sports a Zacks Rank of 1 at present. The company delivered a trailing four-quarter earnings surprise of 17.6%, on average. FLR stock has climbed 12% in the past six months.
The Zacks Consensus Estimate for Fluor’s 2026 sales and EPS indicates growth of 3.4% and 25.6%, respectively, from the prior-year levels.
Sterling Infrastructure, Inc. (STRL - Free Report) flaunts a Zacks Rank of 1 at present. The company delivered a trailing four-quarter earnings surprise of 15.7%, on average. STRL stock has gained 31.8% in the past six months.
The Zacks Consensus Estimate for Sterling’s 2026 sales and EPS indicates growth of 24.6% and 25.8%, respectively, from the prior-year levels.
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KB Home Q1 Earnings Meet Estimates, Revenues Miss, Both Down Y/Y
Key Takeaways
KB Home (KBH - Free Report) reported first-quarter fiscal 2026 results. The quarter’s earnings came in line with the Zacks Consensus Estimate, while total revenues missed the same. Both metrics decreased on a year-over-year basis.
KB Home’s fiscal first-quarter performance reflects that the company is navigating a complex macroeconomic landscape while executing a deliberate strategic pivot. The recent escalation of conflict in the Middle East has added a further layer of uncertainty to an already cautious demand environment. Against this backdrop, and given that fiscal first-quarter net orders fell short of the level required to sustain its prior full-year delivery guidance, the company has revised its delivery outlook downward for the year.
KBH’s quarterly performance was supported by a strategic pivot back to its core built-to-order (BTO) model, alongside strong execution and disciplined operations. Results were further reinforced by an expansion in community count to the highest level in several years, which helped sustain sales activity, as well as a continued focus on managing direct costs efficiently. In addition, performance benefited from a high-quality buyer base, reflected in solid credit profiles and a notably low cancellation rate — the lowest recorded in recent years.
Following the earnings release, KBH stock declined 2.7% during yesterday’s after-hours.
KBH’s Q1 Earnings & Revenue Discussion
The company reported adjusted earnings of 52 cents per share, in line with the Zacks Consensus Estimate. In the year-ago quarter, it reported an adjusted EPS of $1.49.
KB Home Price, Consensus and EPS Surprise
KB Home price-consensus-eps-surprise-chart | KB Home Quote
Total revenues of $1.08 billion missed the consensus mark of $1.1 billion by 2% and decreased 22.6% year over year.
KB Homes’ Segmental Details
Homebuilding: The segment's revenues of $1.07 billion declined 22.7% from the prior-year quarter’s level of $1.39 billion. The number of homes delivered was 2,370 units, down 14% from the year-ago period’s level of 2,770 units. The reported figure was down from our projection of 2,385 units for the quarter. The average selling price (ASP) decreased 9.7% from a year ago to $452,100. Our model predicted deliveries’ ASP to be $461,600.
Net orders increased 3% from the prior year to 2,846 units. The value of net orders was also up to $1.36 billion from the year-ago quarter’s value of $1.35 billion. We projected net orders to be 2,883 units or $1.36 billion for the fiscal first quarter. Absorption or monthly net orders per community decreased to 3.5 from 3.6 year over year.
The cancellation rate, as a percentage of gross orders, was 12% compared with 16% in the year-ago period.
The quarter-end backlog totaled 3,604 homes, down from the year-ago figure of 4,436 homes. Further, potential housing revenues from the backlog declined 22.7% from the prior-year period to $1.7 billion.
The average community count was up year over year by 7% to 274, and the ending community count was up 8% to 276.
Within homebuilding, the housing gross margin (excluding inventory-related charges) contracted 480 basis points (bps) year over year to 15.5%. The contraction was primarily driven by pricing reductions, higher relative land costs, an unfavorable geographic mix and reduced operating leverage. Our model anticipated the housing gross margin to be at exactly 15.5% for the quarter.
In the quarter, selling, general and administrative expenses (SG&A), as a percentage of housing revenues, expanded 120 bps to 12.2%.
Homebuilding operating margin was 3.1%, down from 9.2%. We expected the operating margin to be 2.9% for the reported quarter.
Financial Services: The segment's revenues increased 4.6% year over year to $5 million. The pre-tax income was $5.5 million, down 26.7% from a year ago. The downturn reflected reduced equity income from the mortgage banking joint venture, partly offset by increased insurance commission revenues.
KB Home’s Financial Position
KB Home had homebuilding cash and cash equivalents of $200.5 million as of Feb. 28, 2026, down from $228.6 million reported at the end of fiscal 2025. The company had a total liquidity of $1.2 billion, including approximately $1 billion of available capacity under its revolving credit facility, with $200 million of cash borrowings outstanding.
As of the end of first-quarter fiscal 2026, the debt-to-capital was 32.9%, up from 30.3% at the end of fiscal 2025.
In the fiscal first quarter of 2026, KBH repurchased approximately 0.8 million shares of its outstanding common stock for $50 million. As of Feb. 28, 2026, it had $850 million remaining under the repurchase authorization.
KB Home Unveils Q2 Guidance
For the second quarter of fiscal 2026, the company is expecting housing revenues to be in the $1.05-$1.15 billion band, down from $1.52 billion reported in the year-ago period. It expects deliveries to be in the range of 2,250-2,450 homes compared with 3,120 homes delivered in the year-ago period.
Assuming no inventory-related charges, the housing gross profit margin is expected to be between 15% and 15.6%, down from 19.7% reported in the year-ago period. SG&A expenses, as a percentage of housing revenues, are expected to be in the range of 12.4% to 13%, compared with 10.7% reported in the year-ago period.
KBH projects an effective tax rate of approximately 19%.
FY26 Guidance Lowered by KBH
For fiscal 2026, KB Home is expecting deliveries to be in the range of 10,000 to 11,500 homes, down from the prior expectation of 11,000-12,500 homes. The company is expecting housing revenues to be in the range of $4.8-$5.5 billion, also down from the previous expectation range of $5.1-$6.1 billion.
KBH’s Zacks Rank & Key Picks
KB Home currently carries a Zacks Rank #4 (Sell).
Some top-ranked stocks from the Construction sector are:
Comfort Systems USA, Inc. (FIX - Free Report) flaunts a Zacks Rank #1 (Strong Buy) at present. The company delivered a trailing four-quarter earnings surprise of 35.2%, on average. FIX stock has surged 86.9% in the past six months. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Comfort Systems’ fiscal 2026 sales and EPS indicates growth of 20.3% and 26.7%, respectively, from the prior-year levels.
Fluor Corporation (FLR - Free Report) sports a Zacks Rank of 1 at present. The company delivered a trailing four-quarter earnings surprise of 17.6%, on average. FLR stock has climbed 12% in the past six months.
The Zacks Consensus Estimate for Fluor’s 2026 sales and EPS indicates growth of 3.4% and 25.6%, respectively, from the prior-year levels.
Sterling Infrastructure, Inc. (STRL - Free Report) flaunts a Zacks Rank of 1 at present. The company delivered a trailing four-quarter earnings surprise of 15.7%, on average. STRL stock has gained 31.8% in the past six months.
The Zacks Consensus Estimate for Sterling’s 2026 sales and EPS indicates growth of 24.6% and 25.8%, respectively, from the prior-year levels.