KB Home (KBH) T 2026 Financial Results Summary
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KB Home (KBH) Q3 2026: Revenue Decline Amid Market Challenges — Disappointing Quarter
KB Home (NYSE: KBH) reported its third-quarter results for 2026, revealing a significant decline in revenue and earnings compared to the previous year. Specifically, revenues fell by $323 million or 20% year-over-year to $1.30 billion, while diluted earnings per share (EPS) decreased by $0.56 to $1.05 from $1.61 in Q3 2025.
This quarter's performance is disappointing for shareholders, primarily due to the ongoing challenges in the housing market, including higher mortgage interest rates and geopolitical uncertainties that have dampened buyer confidence. The decline in both revenue and net income reflects these adverse conditions, which have pressured affordability and led to a cautious approach among prospective homebuyers.
Key Financial Metrics
- Revenues: $1.30 billion, down $323 million or 20% YoY
- Diluted EPS: $1.05, down $0.56 or 35% YoY
- Homes Delivered: 2,732, down 661 homes or 19% YoY
- Average Selling Price: $473,000, down from $475,700
- Homebuilding Operating Income: $67.1 million, down from $131.2 million
- Net Income: $65.3 million, down from $109.8 million
- Effective Tax Rate: 19.6%, down from 23.3%
Operational Insights
The decline in home deliveries and revenue is attributed to a challenging housing market, as noted by Executive Chairman Jeffrey Mezger. The company has made strides in transitioning to a predominantly Built to Order (BTO) model, with BTO homes accounting for nearly three-quarters of deliveries in the quarter. However, the housing gross profit margin fell to 16.5%, down from 18.2% in the prior year, primarily due to pricing pressures and increased land costs.
Shareholder Returns and Capital Allocation
KB Home repurchased $50.0 million of common stock during the quarter, bringing total repurchases for the year to $175.0 million. The company remains committed to enhancing long-term shareholder value through its ongoing repurchase program and a consistent quarterly dividend, although specific dividend amounts were not disclosed in this report.
Guidance and Future Outlook
Looking ahead, KB Home provided guidance for the fourth quarter, expecting deliveries between 3,000 and 3,500 homes and housing revenues in the range of $1.45 billion to $1.65 billion. The company anticipates a housing gross profit margin between 16.0% and 16.6%, assuming no inventory-related charges.
Investors should closely monitor the company's ability to navigate the current market conditions and its performance in the upcoming quarter. Key indicators will include the effectiveness of its BTO strategy, community count growth, and how well it can manage costs amid ongoing economic pressures.
In summary, while KB Home is taking steps to adapt to a challenging environment, the significant year-over-year declines in revenue and earnings indicate a tough quarter for shareholders. The upcoming quarter will be critical in assessing whether the company can stabilize its performance and regain momentum in a difficult housing market.
Note: All amounts in the following tables are in thousands.
| KB HOME CONSOLIDATED STATEMENTS OF OPERATIONS | For the Three Months and Nine Months Ended August 31, 2026 and 2025 | (In Thousands, Except Per Share Amounts – Unaudited) |
|---|---|---|
| Three Months Ended | August 31, 2026 | 2025 |
| Nine Months Ended | August 31, 2026 | 2025 |
| Total Revenues | $1,297,XXX | $1,620,XXX |
| Homebuilding Revenues | $1,292,XXX | $1,614,XXX |
| Costs and Expenses | $-1,225,XXX | $-1,483,XXX |
| Operating Income | $67,134 | $131,163 |
| Interest Income and Other | $4,518 | $1,870 |
| Equity in Income of Unconsolidated Joint Ventures | $2,147 | $1,509 |
| Homebuilding Pretax Income | $73,799 | $134,542 |
| Financial Services Revenues | $4,751 | $6,012 |
| Expenses | $-1,464 | $-1,580 |
| Equity in Income of Unconsolidated Joint Ventures | $4,094 | $4,254 |
| Financial Services Pretax Income | $7,381 | $8,686 |
| Total Pretax Income | $81,180 | $143,228 |
| Income Tax Expense | $-15,900 | $-33,400 |
| Net Income | $65,280 | $109,828 |
| Earnings Per Share: | ||
| Basic | $1.07 | $1.64 |
| Diluted | $1.05 | $1.61 |
| Weighted-average Shares Used to Compute Net Income Per Share, Basic | 60,833 | 66,368 |
| Weighted-average Shares Used to Compute Net Income Per Share, Diluted | 61,759 | 67,737 |
| KB HOME CONSOLIDATED BALANCE SHEETS | (In Thousands – Unaudited) | |
|---|---|---|
| August 31, 2026 | November 30, 2025 | |
| Assets | ||
| Homebuilding: | ||
| Cash and Cash Equivalents | $159,018 | $228,614 |
| Receivables | $397,791 | $350,636 |
| Inventories | $5,981,182 | $5,670,802 |
| Investments in Unconsolidated Joint Ventures | $74,763 | $72,436 |
| Property and Equipment, net | $102,880 | $101,457 |
| Deferred Tax Assets, net | $88,665 | $88,665 |
| Other Assets | $106,431 | $107,833 |
| Total Assets | $6,910,730 | $6,620,443 |
| Liabilities and Stockholders’ Equity | ||
| Homebuilding: | ||
| Accounts Payable | $319,520 | $351,261 |
| Accrued Expenses and Other Liabilities | $736,954 | $731,946 |
| Notes Payable | $2,109,145 | $1,692,977 |
| Total Liabilities | $3,165,619 | $2,776,184 |
| Financial Services | $2,024 | $3,210 |
| Stockholders’ Equity | $3,801,509 | $3,900,858 |
| Total Liabilities and Stockholders’ Equity | $6,969,152 | $6,680,252 |
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