KB Home to Report Q3 Earnings: Here's What Investors Must Know

KB Home KBH is slated to report its third-quarter fiscal 2025 (ended Aug. 31) results on Sept. 24, after market close.

In the last reported quarter, its adjusted earnings per share (EPS) and total revenues topped the Zacks Consensus Estimate by 3.5% and 2.3%, respectively. However, on a year-over-year basis, both metrics tumbled 30.2% and 10.5%, respectively.

KBH’s earnings topped the consensus mark in two of the last four quarters, met on one occasion, and missed on the remaining one occasion, with an average surprise of 0.5%.

Trend in KBH’s Estimate Revision

For the fiscal third quarter, the Zacks Consensus Estimate for adjusted EPS has remained unchanged at $1.50 over the past 60 days. The projected figure indicates a 26.5% decline from the year-ago quarter’s earnings of $2.04 per share.

KB Home Price and EPS Surprise

KB Home price-eps-surprise | KB Home Quote

The consensus estimate for total revenues is pegged at $1.60 billion, indicating a decline of 8.9% from the prior-year quarter’s level.

Factors to Shape KB Home’s Q3 Results

Revenues

In the fiscal third quarter, KB Home’s top line is expected to have tumbled year over year due to a decline in home deliveries and average selling price (ASP) of deliveries. The continuous struggle of homebuyers to own new homes due to high mortgage rates and lingering risks related to the new tariff regime is likely to have blocked the growth of homebuilders like KB Home.

Due to the ongoing market pressures, the company expects housing revenues in the fiscal third quarter to range within $1.5-$1.7 billion, down from $1.75 billion reported a year ago. ASP of home deliveries during the quarter to be reported is projected between $470,000 and $480,000, also down year over year from $480,900.

Our Zacks model predicts housing revenues to be down year over year by 7% to $1.62 billion, with ASP on home deliveries being down 1% to $476,200. We expect home deliveries to be down 6.1% year over year to 3,409 homes. 

Although the homebuyers are still not able to adjust to the new mortgage rate benchmark amid inflationary pressures, KB Home has been continuously executing several initiatives to minimize the affordability concerns and boost revenue visibility.

Margins

Although initiatives like the Returns-Focused Growth Plan and Built-to-Order approach are encouraging, higher relative land costs alongside price reductions and other homebuyer concessions are likely to have weighed heavily on KBH’s margins in the fiscal third quarter.

The company expects adjusted housing gross margin in the range of 18.1-18.7%, significantly down from 20.7% reported in the year-ago quarter. The homebuilding adjusted operating margin (assuming no inventory-related charges) is expected to be between 7.6% and 8.2%, comparing unfavorably with the year-ago figure of 10.9%.

We expect adjusted housing gross margin and homebuilding adjusted operating margin to be 18.4% and 7.9%, respectively, reflecting year-over-year declines of 230 basis points (bps) and 300 bps.

KBH expects selling, general & administrative (SG&A) expenses, as a percentage of housing revenues, to be between 10.3% and 10.7%, up from the year-ago figure of 9.8%. Our model expects the metric to be up year over year by 70 bps to 10.5% in the fiscal third quarter. 

Orders & Backlogs

KB Home’s continuous efforts to match its housing starts with its sales pace are noteworthy.

Keeping the tailwinds in mind, we expect new orders to increase 6.5% to 3,286 units on a year-over-year basis. However, the backlog is expected to be 4,653 units, implying a fall from 5,724 units reported in the prior year.

What Our Model Indicates for KBH

Our proven model does predict an earnings beat for KB Home this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

KBH’s Earnings ESP: The company has an Earnings ESP of +1.40%. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.

KBH’s Zacks Rank: KB Home currently has a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Stocks With the Favorable Combination

Here are some other companies in the Zacks Construction sector that per our model, have the right combination of elements to post an earnings beat in the respective quarters to be reported.

Comfort Systems USA, Inc. FIX has an Earnings ESP of +8.92% and a Zacks Rank of 1 at present.

Comfort Systems reported better-than-expected earnings in each of the last four quarters, the average surprise being 22.4%. The company’s earnings for the third quarter of 2025 are expected to grow 45.2% from the prior year.

MasTec, Inc. MTZ currently has an Earnings ESP of +2.29% and a Zacks Rank of 2.

MasTec reported better-than-expected earnings in the trailing four quarters, the average surprise being 25.2%. The company’s earnings for the third quarter of 2025 are expected to increase year over year by 41.7%.

Martin Marietta Materials, Inc. MLM currently has an Earnings ESP of +1.29% and a Zacks Rank of 3.

Martin Marietta’s earnings for the third quarter of 2025 are expected to increase 12% year over year. The company reported better-than-expected earnings in two of the last four quarters and missed on the remaining two occasions, the negative average surprise being 0.9%.

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This article originally published on Zacks Investment Research (zacks.com).

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