KB Home 2025 Q2 Earnings Misses Targets as Net Income Falls 35.9%

KB Home (KBH) reported its fiscal 2025 Q2 earnings on Jul 10th, 2025. The results were below expectations, with both revenue and net income experiencing declines compared to the previous year. The company's guidance also reflected a decrease, anticipating lower housing revenues for the fiscal year. Despite these challenges, the firm continues to navigate the current market environment with a focus on optimizing assets and managing risks.

Revenue
The total revenue for KB Home in 2025 Q2 declined by 10.5% to $1.53 billion, compared to $1.71 billion in the same quarter of 2024. The revenue from the homebuilding segment contributed a significant portion, reaching $1.52 billion, while the financial services segment added $4.87 million to the total figure. These results reflect the challenging market conditions impacting the homebuilding industry.

Earnings/Net Income
KB Home's earnings per share (EPS) fell by 30.8% to $1.53 in 2025 Q2 from $2.21 in the previous year. The company's net income also dropped significantly, decreasing by 35.9% to $107.88 million from $168.42 million in 2024 Q2. The EPS reflects a weaker performance in the current quarter.

Price Action
The stock price of KB Home has edged up 0.84% during the latest trading day, has edged up 0.79% during the most recent full trading week, and has jumped 8.83% month-to-date.

Post-Earnings Price Action Review
The strategy of buying KBH shares when earnings exceed expectations and holding for 30 days has delivered moderate returns but underperformed the benchmark. This approach achieved a 49.16% return, trailing the benchmark by 37.18%. The strategy's maximum drawdown was -30.61%, while the Sharpe ratio stood at 0.38. These figures highlight a challenging risk-return profile, emphasizing the importance of effective risk management in a volatile market environment. Such outcomes underline the necessity for investors to consider potential market fluctuations and align their strategies accordingly.

CEO Commentary
Jeffrey T. Mezger, Chairman and CEO, highlighted that KB Home's second-quarter performance met or exceeded guidance, driven by improvements in build times and cost reductions. Despite solid results, consumer confidence remains low due to affordability challenges and macroeconomic uncertainties, impacting demand. Mezger noted the need to adjust pricing strategies to optimize asset value while returning to a focus on built-to-order homes, which differentiate the company from competitors. He expressed cautious optimism regarding the long-term housing market outlook, emphasizing that while conditions have softened, the company is well-positioned to navigate these challenges.

Guidance
For fiscal 2025, KB Home anticipates housing revenues between $6.30 billion and $6.50 billion, a decrease from previous guidance. The average selling price is projected to range from $480,000 to $490,000, with third-quarter housing revenues expected between $1.50 billion and $1.70 billion. The company expects a housing gross profit margin of 18.1% to 18.7% for Q3 and 19% to 19.4% for the full year, reflecting ongoing market conditions.

Additional News
KB Home's board of directors declared a quarterly cash dividend of $0.25 per share, payable on August 21, 2025, to stockholders of record on August 7, 2025. This announcement highlights the company's commitment to returning value to shareholders despite current market challenges. Additionally, KB Home has been actively opening new communities, including a new townhome community in Clermont, Florida, and several other locations across the United States. These expansions demonstrate the company's ongoing strategy to grow its footprint and strengthen its market position in the homebuilding industry.