KB Home to Report Q1 Earnings: Here's What Investors Must Know

Core Insights - KB Home (KBH) is expected to report its first-quarter fiscal 2026 results on March 24, with adjusted EPS and total revenues anticipated to decline significantly year-over-year [1][3][8] Earnings Performance - In the last reported quarter, KBH's adjusted EPS and total revenues exceeded the Zacks Consensus Estimate by 7.3% and 2.8%, respectively, but showed declines of 24.1% and 15.5% year-over-year [1][2] - The consensus estimate for adjusted EPS for the upcoming quarter has decreased to 52 cents, reflecting a 65.1% decline from $1.49 in the same quarter last year [3][8] - Total revenue is projected at $1.1 billion, indicating a 21.1% decrease from the prior-year quarter [3][8] Revenue Factors - The expected decline in revenues is attributed to reduced home deliveries and average selling prices (ASP), driven by affordability concerns among homebuyers due to high mortgage rates and lower income opportunities [4][5] - KBH anticipates housing revenues to range between $1.05 billion and $1.15 billion, down from $1.39 billion a year ago, with home deliveries expected to fall to between 2,300 and 2,500 units [4][5] Margins and Costs - KBH's adjusted housing gross margin is expected to be between 15.4% and 16%, significantly lower than the 20.3% reported in the previous year, while the adjusted operating margin is projected to be in the low single digits, down from 9.3% [7][9] - Higher land costs and ASP reductions are anticipated to negatively impact margins, alongside increased selling, general, and administrative (SG&A) expenses as a percentage of housing revenues [7][9] Orders and Backlog - New orders are expected to rise by 4% to 2,883 units year-over-year, but the backlog is projected to decline by 18.2% to 3,627 units, indicating softer demand visibility [10][8] Earnings Prediction - Current models do not predict an earnings beat for KBH, with an Earnings ESP of +0.28% and a Zacks Rank of 4 (Sell) [11]