A month has gone by since the last earnings report for KB Home (KBH Quick QuoteKBH - Free Report) . Shares have added about 6.6% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is KB Home due for a pullback? Well, first let's take a quick look at its latest earnings report in order to get a better handle on the recent drivers for KB Home before we dive into how investors and analysts have reacted as of late.

KB Home Q1 Earnings Meet Estimates, Revenues Miss, Both Down Y/Y

KB Home 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.

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 average selling price (ASP) decreased 9.7% from a year ago to $452,100. 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. 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, unfavorable geographic mix and reduced operating leverage. 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.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review.

The consensus estimate has shifted -44.54% due to these changes.

VGM Scores

At this time, KB Home has a poor Growth Score of F, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a score of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise KB Home has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.

Performance of an Industry Player

KB Home belongs to the Zacks Building Products - Home Builders industry. Another stock from the same industry, Lennar (LEN Quick QuoteLEN - Free Report) , has gained 2.5% over the past month. More than a month has passed since the company reported results for the quarter ended February 2026.

Lennar reported revenues of $6.62 billion in the last reported quarter, representing a year-over-year change of -13.3%. EPS of $0.88 for the same period compares with $2.14 a year ago.

Lennar is expected to post earnings of $1.24 per share for the current quarter, representing a year-over-year change of -34.7%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.4%.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Lennar. Also, the stock has a VGM Score of F.