KB Home (NYSE:KBH) Beats Q4 2025 Estimates but Shares Fall on Weak Outlook

KB HOME (NYSE:KBH) closed its 2025 fiscal year with a fourth-quarter earnings report that delivered a mixed financial picture. The homebuilder managed to exceed Wall Street's top and bottom-line expectations for the quarter, but the underlying figures reflect the persistent challenges of a housing market grappling with affordability concerns and elevated mortgage rates. The market's immediate reaction was negative, with shares declining in after-hours trading following the release.

Earnings Performance vs. Estimates

For the quarter ended November 30, 2025, KB Home reported a performance that edged past analyst forecasts. The company's revenue of $1.69 billion came in slightly above the consensus estimate of approximately $1.67 billion. More notably, the company's adjusted diluted earnings per share (EPS) of $1.92 surpassed the estimated $1.81.

• Reported Revenue: $1.69 billion
• Analyst Estimate: ~$1.67 billion
• Variance: Beat
• Reported Adj. EPS: $1.92
• Analyst Estimate: $1.81
• Variance: Beat

However, these figures represent a significant year-over-year decline, underscoring the tougher operating environment. Compared to the fourth quarter of 2024, revenue fell 15.3%, and adjusted net income dropped from $191.2 million to $125.7 million.

Market Reaction and Price Action

Despite the earnings beat, investor sentiment appeared focused on the broader pressures facing the business. Following the earnings announcement, KB Home's stock traded lower in the after-market session. This negative price action suggests that while the company navigated near-term expectations, the market remains concerned about the forward-looking indicators and margin compression detailed in the report.

Key Takeaways from the Q4 2025 Report

The quarterly results and accompanying commentary from CEO Jeffrey Mezger highlighted several critical trends:

• Challenging Market Conditions: Management cited lower consumer confidence, affordability issues, and high mortgage interest rates as headwinds impacting the business.
• Declining Volume and Prices: The number of homes delivered fell 9% year-over-year to 3,619, while the average selling price declined 7% to $465,600. This dual pressure led to the sharp drop in overall revenue.
• Margin Compression: Profitability was notably weaker. The housing gross profit margin contracted to 17.0%, down from 20.9% a year ago. The company attributed this to price reductions, higher relative land costs, and a shift in geographic sales mix.
• Weaker Order Trends: Net new orders for the quarter decreased 10% to 2,414 homes. The value of the company's backlog—homes ordered but not yet delivered—fell substantially to $1.40 billion from $2.24 billion at the end of the prior-year quarter.
• Strong Capital Return: A bright spot was the company's commitment to returning capital to shareholders. In fiscal 2025, KB Home returned over $600 million through dividends and share repurchases, including $538.5 million spent to buy back approximately 9.4 million shares.

Forward-Looking Guidance vs. Analyst Expectations

Looking ahead, KB Home provided guidance for the first quarter and full year of 2026 that appears cautious relative to existing analyst models.

For the 2026 first quarter, the company expects:

• Housing revenues between $1.05 billion and $1.15 billion.
• This range is below the current analyst sales estimate of approximately $1.16 billion for Q1.

For the 2026 full year, the company expects:

• Housing revenues between $5.10 billion and $6.10 billion.
• The midpoint of this range ($5.60 billion) is below the current full-year analyst sales estimate of $5.77 billion.

This conservative outlook, particularly for the coming quarter, likely contributed to the market's tepid reaction post-earnings, as it signals management expects near-term challenges to persist.

For a detailed look at historical earnings and future analyst estimates for KB Home, you can review the data here.

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Disclaimer: This article is for informational purposes only and does not constitute financial advice, a recommendation, or an offer to buy or sell any security. The information presented is based on data provided and should not be the sole basis for any investment decision.