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

KB Home KBH is slated to report its first-quarter fiscal 2026 (ended Feb. 28) results on March 24, after market close.In the last reported quarter, its adjusted earnings per share (EPS) and total revenues topped the Zacks Consensus Estimate by 7.3% and 2.8%, respectively. However, on a year-over-year basis, both metrics tumbled 24.1% and 15.5%, respectively.KBH’s earnings topped the consensus mark in three of the last four quarters and missed on the remaining occasion, with an average surprise of 3.4%.How are KBH’s Estimates Placed?For the fiscal first quarter, the Zacks Consensus Estimate for adjusted EPS has moved down to 52 cents from 53 cents over the past 30 days. The projected figure indicates a 65.1% decline from the year-ago quarter’s earnings of $1.49 per share.The consensus estimate for total revenues is pegged at $1.1 billion, indicating a decline of 21.1% from the prior-year quarter’s level.KB Home Price and EPS Surprise KB Home price-eps-surprise | KB Home QuoteFactors Likely to Have Shaped KB Home’s Q1 PerformanceRevenuesIn the fiscal first 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 affordability concerns stemming from reduced income opportunities and a still-high mortgage rate scenario has been concerning for homebuilders like KB Home. Due to the ongoing market pressures, the company expects housing revenues in the fiscal first quarter to range within $1.05-$1.15 billion, down from $1.39 billion reported a year ago. KBH expects home deliveries between 2,300 and 2,500 during the quarter, reflecting a decline from 2,770 units delivered in the year-ago quarter.Our Zacks model predicts housing revenues to be down year over year by 20.6% to $1.1 billion, with ASP on home deliveries being down 7.8% to $461,600. We expect home deliveries to be down 13.9% year over year to 2,385 homes. Although the homebuyers are still not able to adjust to the new mortgage rate benchmark amid macroeconomic pressures, KB Home has been continuously executing several initiatives to minimize the affordability concerns and boost revenue visibility. Its Built-to-Order (BTO) model, which supports diverse buyer segments, including first-time, move-up and empty-nester buyers, is likely to provide consistent support during periods of turmoil.MarginsAlthough initiatives like the Returns-Focused Growth Plan and Built-to-Order approach are encouraging, higher relative land costs alongside ASP reductions are likely to have weighed heavily on KBH’s bottom line in the fiscal first quarter. As highlighted by KBH, negative operating leverage and return of seasonality in the fiscal first quarter are also expected to have pulled back margins. KB Home expects adjusted housing gross margin in the range of 15.4-16%, significantly down from 20.3% reported in the year-ago quarter. The homebuilding adjusted operating margin (assuming no inventory-related charges) is expected to be in low single digits, down from the year-ago figure of 9.3%.Our model projects adjusted housing gross margin and homebuilding adjusted operating margin to be 15.5% and 2.9%, respectively, reflecting year-over-year declines of 480 basis points (bps) and 640 bps.KBH expects selling, general & administrative (SG&A) expenses, as a percentage of housing revenues, to be between 12.2% and 12.8%, up from the year-ago figure of 11%. Our model expects the metric to be up year over year by 160 bps to 12.6% in the fiscal first quarter. Orders & BacklogKB 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 4% to 2,883 units on a year-over-year basis. However, the backlog is expected to be 3,627 units, implying a 18.2% fall from 4,436 units reported in the prior year.What Our Model Indicates for KBHOur proven model does not 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. However, this is not the case this time around.KBH’s Earnings ESP: The company has an Earnings ESP of +0.28%. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.KBH’s Zacks Rank: The stock currently has a Zacks Rank #4 (Sell).You can see the complete list of today’s Zacks #1 Rank stocks here.Stocks With the Favorable CombinationHere are some 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.AECOM ACM has an Earnings ESP of +5.66% and a Zacks Rank of 2 at present.AECOM reported better-than-expected earnings in three of the last four quarters and missed on the remaining occasion, the average surprise being 2.2%. AECOM’s earnings for the second quarter of fiscal 2026 are expected to grow 27.2% from the prior year.Quanta Services, Inc. PWR currently has an Earnings ESP of +1.39% and a Zacks Rank of 3.Quanta’s earnings for the first quarter of 2026 are expected to increase 20.2% year over year. Quanta reported better-than-expected earnings in each of the last four quarters, the average surprise being 4.3%.Masco Corporation MAS currently has an Earnings ESP of +0.10% and a Zacks Rank of 3.Masco reported better-than-expected earnings in two of the trailing four quarters and missed on the other two occasions, the average surprise being 3.8%. Masco’s earnings for the first quarter of 2026 are expected to increase year over year by 1.2%.#1 Semiconductor Stock to Buy (Not NVDA)The incredible demand for data is fueling the market's next digital gold rush. As data centers continue to be built and constantly upgraded, the companies that provide the hardware for these behemoths will become the NVIDIAs of tomorrow.One under-the-radar chipmaker is uniquely positioned to take advantage of the next growth stage of this market. It specializes in semiconductor products that titans like NVIDIA don't build. It's just beginning to enter the spotlight, which is exactly where you want to be.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Quanta Services, Inc. (PWR): Free Stock Analysis Report Masco Corporation (MAS): Free Stock Analysis Report AECOM (ACM): Free Stock Analysis Report KB Home (KBH): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks