KB Home 2025 Q4 Earnings Beats Estimates Despite 46.7% Net Income Drop

KB Home reported Q4 2025 earnings that exceeded non-GAAP estimates but fell short of GAAP expectations, with guidance for 2026 reflecting cautious optimism amid market headwinds.

Revenue

KB Home’s Q4 revenue declined by 15.3% year-over-year to $1.69 billion, driven by lower home deliveries and average selling prices. The company attributed the drop to persistent challenges in consumer confidence, affordability, and elevated mortgage rates.

Earnings/Net Income

Earnings per share (EPS) under GAAP fell 39.0% to $1.58 in Q4 2025, while net income dropped 46.7% to $101.52 million. Despite these declines, non-GAAP EPS of $1.92 beat estimates by $0.13, and the company maintained shareholder returns through dividends and repurchases. The EPS shortfall highlights margin pressures from lower home sales and higher costs, though strategic capital allocation offset some losses.

Post-Earnings Price Action Review

The strategy of buying KB Home shares following earnings beats and holding for 30 days generated a 24.8% cumulative return over three years, outpacing the S&P 500’s 16.6% gain. This suggests strong short-term market confidence in the company’s earnings resilience.

CEO Commentary

Chairman and CEO Jeffrey Mezger emphasized the company’s ability to meet financial targets despite market challenges, noting 13,000 homes delivered and $600 million returned to shareholders. For 2026, the focus will shift to optimizing assets, building affordable homes, and aligning costs with revenue expectations.

Guidance

KB Home provided 2026 Q1 guidance for 2,300–2,500 home deliveries and $1.05–$1.15 billion in housing revenue. Full-year 2026 guidance includes 11,000–12,500 deliveries and $5.1–$6.1 billion in housing revenue. The company aims to maintain a 24.0–26.0% effective tax rate and continue strategic share repurchases.

Additional News

KB Home announced a $100 million share repurchase in Q4 2025, adding to $600 million returned to shareholders in fiscal 2025. The company also secured a new $1.2 billion revolving credit facility to enhance financial flexibility. Additionally, KB Home plans to open 35–40 new communities in Q1 2026, signaling expansion efforts to boost market presence.