KB Home’s second quarter results for 2025 were met with a negative market reaction, as several evolving market headwinds weighed on performance. Management pointed to subdued demand during the spring selling season, with CEO Jeffrey Mezger citing that "affordability challenges have persisted compounded by the variability in mortgage interest rates, which remain elevated as well as macroeconomic and geopolitical uncertainty." Operationally, the company highlighted faster build times and reduced direct costs as partial offsets, but acknowledged that consumer caution and higher resale inventory pressured new order volumes and operating margins.
Is now the time to buy KBH? Find out in our full research report (it’s free).
KB Home (KBH) Q2 CY2025 Highlights:
- Revenue: $1.53 billion vs analyst estimates of $1.51 billion (10.5% year-on-year decline, 1.6% beat)
- Adjusted EPS: $1.50 vs analyst estimates of $1.46 (2.7% beat)
- Adjusted EBITDA: $144.7 million vs analyst estimates of $164.2 million (9.5% margin, 11.9% miss)
- The company dropped its revenue guidance for the full year to $6.4 billion at the midpoint from $6.8 billion, a 5.9% decrease
- Operating Margin: 8.8%, down from 11.4% in the same quarter last year
- Backlog: $2.29 billion at quarter end, down 26.7% year on year
- Market Capitalization: $3.69 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions KB Home’s Q2 Earnings Call
- John Lovallo (UBS) asked about SG&A expense management amid lower revenue projections. CEO Jeffrey Mezger explained that headcount and overhead are being adjusted to align with volume, aiming to bring the ratio “back down under 10%.”
- Stephen Kim (Evercore ISI) questioned the company’s ability to achieve fourth quarter closings given current backlog and order pace. President Rob McGibney cited improved build times and a similar approach to last year’s period, saying past inventory sales trends support their delivery targets.
- Michael Jason Rehaut (JPMorgan) sought clarity on margin improvement in the fourth quarter and the impact of incentives versus base price adjustments. CFO Rob Dillard pointed to operating leverage as the main driver of sequential margin uplift, with only limited reliance on incentives.
- Alan S. Ratner (Zelman & Associates) probed the competitive landscape and the company’s shift away from incentives while peers increase them. McGibney said the focus remains on transparent pricing and value, acknowledging some customers still prefer incentives offered elsewhere.
- Rafe Jason Jadrosich (Bank of America) inquired about land cost inflation and relief in future land pricing. CEO Mezger responded that while improvement costs and fees have increased, land sellers are now offering more favorable terms, which could translate into lower prices in the future.
Catalysts in Upcoming Quarters
In the quarters ahead, the StockStory team will monitor (1) the pace of net order recovery as consumer sentiment and mortgage rates evolve, (2) the company’s ability to sustain further reductions in build times and direct costs, and (3) the effectiveness of its strategy to moderate land investment while maintaining a robust pipeline for future community growth. Execution on pricing flexibility and inventory management will also be important indicators of operational resilience.
KB Home currently trades at $53.98, up from $53.36 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free).
High-Quality Stocks for All Market Conditions
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
