KB Home (KBH) Earnings
KB Home is expected to report next earnings on September 23, 2026 (in NaN days), with a consensus EPS estimate of $0.86. KBH has beaten EPS estimates in 8 of its last 12 reported quarters (average surprise +2.1% over the last four).
| Report date | EPS est | EPS actual | Surprise | Revenue | Rev. surprise |
|---|---|---|---|---|---|
| Jun 23, 2026 | $0.44 | $0.43 | -2.3% | $1.1B | +2.1% |
| Mar 24, 2026 | $0.52 | $0.52 | +0.0% | $1.1B | -1.4% |
| Sep 24, 2025 | $1.50 | $1.61 | +7.3% | $1.6B | +1.8% |
| Jun 23, 2025 | $1.45 | $1.50 | +3.4% | $1.5B | +1.6% |
| Mar 24, 2025 | $1.57 | $1.49 | -5.1% | $1.4B | -7.2% |
| Sep 24, 2024 | $2.06 | $2.04 | -1.0% | $1.8B | +1.3% |
| Jun 18, 2024 | $1.80 | $2.15 | +19.4% | $1.7B | +3.4% |
| Mar 20, 2024 | $1.57 | $1.76 | +12.1% | $1.5B | +0.5% |
| Sep 20, 2023 | $1.43 | $1.80 | +25.9% | $1.6B | -1.8% |
| Jun 21, 2023 | $1.33 | $1.94 | +45.9% | $1.8B | +24.2% |
| Mar 22, 2023 | $1.15 | $1.45 | +26.1% | $1.4B | +5.8% |
| Sep 21, 2022 | $2.67 | $2.89 | +8.2% | $1.8B | -1.7% |
Source: company filings + earnings calendar. For informational purposes only — not investment advice.
Earnings call summary
Q2 FY2026 · June 23, 2026
AI summary of management’s prepared remarks and analyst Q&A. For informational purposes only — not investment advice.
Management highlights
### Strategic Shift to Built-to-Order (BTO) Model - One year after announcing the plan to return to a predominantly BTO core business model, the company exceeded its expected BTO net order mix target in Q2, with 73% of 3,317 total net orders coming from BTO homes. The temporary delivery trough caused by the strategic shift is now confirmed to be behind the company. - The BTO model creates a sold backlog before construction starts, providing full visibility into buyer, price, construction costs, and closing date, reducing margin risk from market shifts compared to the speculative building model. A 1,500+ backlog of sold, unstarted homes gives leverage to negotiate lower costs with trade partners, who value the predictable, steady workflow BTO provides. - BTO homes deliver structurally higher margins than speculative homes, with a consistent ~400 basis point gross margin premium that has held steady through market cycles. Lower cancellation rates from highly invested buyers improve backlog conversion reliability. ### Operational Progress - Ended the quarter with 280 active communities, up 11% year-over-year, hitting the high end of new community opening targets. The company reached its planned peak community count in Q2, with an expected sequential decline to 270-280 active communities in Q3 as existing communities sell out. - Average BTO build time decreased 8 days sequentially to 100 days (from start to completion), the lowest level in more than a decade. Shorter build times reduce the delivery wait compared to resale homes (the company's largest competitor) and let buyers lock in mortgage rates more easily, enabling same-year sales for summer orders that would have previously been pushed to the next year. - Finished unsold inventory was reduced to 11% of total production, down from 25% in Q1, as the company sold through most of its aged speculative inventory. 77% of all homes in process are now sold, creating a well-balanced production cadence. - Total ending backlog grew 26% sequentially to 4,526 homes, and is up 45% since the start of 2026, with the year-over-year backlog gap narrowed significantly from Q1. ### Capital Allocation & Balance Sheet - Maintained a balanced capital allocation strategy, investing for growth while returning capital to shareholders. Repurchased 1.4 million shares for $75 million in Q2, with a planned $50-$100 million in repurchases for Q3. Inclusive of dividends, over $90 million in capital was returned to shareholders in Q2. - Book value per share increased to nearly $62, with share repurchases executed below current book value, making them accretive to earnings and book value per share. - Invested just under $500 million in land acquisition and development in Q2, 75% of which went to development of land already owned. Ended Q2 with 59,000 total owned or controlled lots, maintaining a long-term target of 3-5 years of lot supply. - Total liquidity is $1.12 billion, with no debt maturities until June 2027, keeping the balance sheet well-positioned for the current market environment. - Entered the Atlanta market (a top 10 U.S. housing market with strong population/job growth), acquiring the first land parcel for a projected 2027 community opening, following the successful entry template used for Seattle, Boise, and Charlotte.
Guidance
- **Full Year 2026 Guidance Update**: Maintained the prior midpoint for full-year 2026 home deliveries, while narrowing the guidance range to 10,500 to 11,000 homes. Full-year housing revenue guidance is narrowed to $4.9 billion to $5.3 billion. Adjusted housing gross profit margin (assuming no inventory charges) is guided to 16.1% to 16.5%, with sequential margin expansion through the second half of the year. - **Q3 2026 Guidance**: Home deliveries are expected to range from 2,600 to 2,800 units, with housing revenue of $1.2 billion to $1.35 billion. Adjusted housing gross profit margin is guided to 16% to 16.6% (a 60 basis point sequential improvement, half of which comes from increased operating leverage). The SG&A ratio is expected to be 11.3% to 11.9%. The effective tax rate is forecast to be 19% to 21%. Ending community count is expected to be between 270 and 280. Year-over-year backlog growth is expected to return in Q3. - **Q4 2026 Margin Expectations**: A 100 basis point sequential expansion in adjusted housing gross profit margin is projected, with ~60 basis points coming from higher operating leverage, and additional upside from higher BTO delivery mix and a favorable shift to higher-margin, higher-ASP Bay Area communities. Sequential growth in deliveries, revenue, and margin is expected in both Q3 and Q4 2026. - **Full Year 2026 Effective Tax Rate**: Guided to 22% to 24%, a slight downward revision from prior guidance. Full-year SG&A ratio is guided to 11.4% to 11.8%.
Segment performance
KB Home reports only a single core housing segment for its operations. In Q2 2026, the company generated total revenues of $1.1 billion (housing revenues of $1.11 billion, 100% of total revenue), with 2,395 homes delivered, representing a 23% year-over-year decrease in deliveries and a 5% year-over-year decrease in average selling price (ASP). The overall average selling price of delivered homes was $461,900, up 2% sequentially. Homebuilding operating income was $28.2 million (2.5% operating margin), compared to $131.5 million (8.6% operating margin) in the year-ago quarter. Reported housing gross profit margin was 15.2%, compared to 15.3% in Q1 2026 and 19.3% in Q2 2025. Excluding inventory-related charges, adjusted housing gross profit margin was 15.7%, a modest sequential improvement from 15.5% in Q1 2026. Net income was $27.3 million, with diluted earnings per share of $0.43, compared to $1.50 diluted EPS in the year-ago quarter. 73% of Q2 2026 net orders were built-to-order (BTO) homes, and 60% of Q2 2026 deliveries were BTO homes.
Risks & headwinds
- Challenging macroeconomic conditions: Elevated mortgage rates, persistent affordability pressures, rising inflation, low consumer confidence, and ongoing geopolitical uncertainties have weighed on home purchase conversion, leading to a softer-than-expected spring selling season and a community absorption rate of 4 net orders per month. - Recent lumber and material cost volatility: Lumber prices have seen upward pressure in recent months, though the company's diversified sourcing and pricing lock strategy mitigates near-term exposure for started homes. - Land market uncertainty: Many land sellers have not fully adjusted pricing to current market conditions, making it difficult to complete deals that meet the company's return hurdles, leading to disciplined walkaways from some optioned land parcels. - SG&A ratio pressure: Lower delivery volumes in the first half of 2026 increased the SG&A ratio as a percentage of revenue, though higher volumes in the second half are expected to improve this metric. - The company's effective tax rate came in higher than expected in Q2 2026 due to lower than anticipated stock option exercises, with all outstanding options set to expire in October 2026. Energy tax credits will no longer apply to homes delivered after June 30, 2026, reducing tax benefits in the second half of the year.
Analyst Q&A
Q: The expected sequential operating leverage for margin expansion from Q2 to Q3 and Q3 to Q4 looks strong. How does this compare to a normal year, and is there anything unusual about this trajectory? /
A: Management notes the trend is fairly normal, as the company always delivers more volume in the second half than the first half. The lower Q2 delivery volume (the trough from the BTO shift) meant less operating leverage in Q2 than a normal Q2, so the projected sequential improvement just brings leverage back to normal trend levels. The existing overhead structure is set up to handle further scale growth into 2027.
Q: What is the BTO delivery mix run rate expected to be in Q4 2026, and will the Bay Area margin benefit be a one-time Q4 event or a long-term structural improvement? /
A: Management expects BTO to represent ~70% of deliveries in Q4, which is not yet the full long-term target mix, with some speculative inventory still remaining. The Bay Area margin and ASP benefit is not a one-time event; after rebuilding the lot pipeline and leadership team in the region, the improved performance is a structural, long-term change that will continue into 2027 and beyond.
Q: The company's total lot count has declined over the past year as some optioned lots were walked away from. What drove this, and what is the long-term target for lot supply? /
A: Management targets a 3-5 year supply of lots overall, and walks away from optioned deals that no longer meet return hurdles after due diligence. The company first attempts to renegotiate better pricing or terms with land sellers, but will walk away if terms cannot be adjusted, with minimal capital invested in these uncompleted deals. The decline in controlled lots reflects discipline amid market volatility, and the balance sheet supports growth targets for 2027 and 2028.
Q: Historically, BTO homes have a 300-500 basis point gross margin premium over speculative homes. Has this spread changed as the company shifted back to a higher BTO mix? /
A: The spread has held steady for roughly two years, and is currently right around a 400 basis point margin premium for BTO compared to spec homes, even within the same communities and product types. No compression of the premium has occurred as mix has shifted higher.
Q: Have land prices corrected enough to create more acquisition opportunities for KB Home, and will the recent decline in lot count lead to a community count air pocket in 2027-2028? /
A: Land sellers are beginning to accept current market pricing, with more flexible terms and some price declines, but the market has not fully adjusted to meet the company's underwriting hurdles across most markets. There are growing opportunities for finished lot deals that enable faster delivery timelines, and the company is actively pursuing these deals to support growth targets for 2027 and 2028, with no expected major community count shortfall.