Homebuilder company KB Home (NYSE:KBH) aims to reverse recent trends in the sector and the company’s performance, as indicated by its recent earnings report, when third-quarter financial results are reported on Wednesday after the market close.
Earnings Estimates: Analysts expect KB Home to report third-quarter revenue of $1.59 billion, down from $1.75 billion in last year’s third quarter, according to data from Benzinga Pro.
The company beat analyst estimates for revenue in the second quarter and has beaten estimates in nine of the last 10 quarters overall.
Analysts expect KB Home to report quarterly earnings per share of $1.50, down from $2.04 in last year’s third quarter.
The company beat analyst estimates for earnings per share in the second quarter and has beaten analyst estimates in eight of the last 10 quarters overall.
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What Experts Are Saying: KB Home’s earnings report comes after a recent report from homebuilder Lennar Corp (NYSE:LEN), something not lost on Jay Woods, chief market strategist at Freedom Capital Markets.
“KB Home will try to avoid following in the footsteps of fellow homebuilder Lennar when they report results on Thursday afternoon,” Woods wrote in a newsletter. “Like LEN, they haven’t fared well after earnings as they have fallen after seven of the last 9 reports.”
Woods said the KB Home chart shows some bullish technicals with a “great rounded bottom base” and a longer-term golden cross signal.
“Any upbeat news and the stock is poised to run, but the news has been less than stellar as home builders continue to wait for rates to drop to see their business pick up.”
Here are recent analyst ratings on KB Home and their price targets:
- Bank of America Securities: Maintained Neutral rating, raised price target from $60 to $67
- Oppenheimer: Initiated with a Perform rating, no price target
- Wells Fargo: Maintained Underweight rating, raised price target from $50 to $60
Key Items to Watch: KB Home’s second-quarter results were mixed, with revenue and earnings per share beating analyst estimates, but year-over-year figures and guidance came in weak.
The company reported a 13% year-over-year decline in net orders for the quarter, with home deliveries down 11% year-over-year. KB Home’s backlog value was also down 27% year-over-year in the second quarter.
One of the positives was a higher average selling price of $488,700 in the second quarter. This will likely be a key metric investors and analysts look at on Wednesday. The company expects average selling prices to be $480,000 to $490,000 for the whole year.
The company stated that it aimed to reduce its build times and lower direct construction costs to enhance its business operations. These figures could be a key highlight in the third quarter.
After lowering full-year revenue in the second quarter, all eyes may be on full-year guidance on Wednesday as investors brace for any change to the revised figures. Investors and analysts will also be looking for any early indicators as to what 2026 guidance could look like.
Other homebuilders have reported mixed results in recent earnings reports.
Lennar missed analyst estimates for both earnings per share and revenue in the third quarter. The company reported growth in orders and deliveries in the quarter, even compared to the prior year.
D.R. Horton Inc (NYSE:DHI) reported third-quarter results in July with revenue and earnings per share beating analyst estimates. The homebuilder reported a decline in revenue and home sales year-over-year. The company narrowed its full-year guidance.
KB Home reports its latest financial results after the Federal Reserve announced a rate cut and indicated that more cuts could be on the way before the end of 2025. This could be a bullish item for the homebuilder sector. It will be interesting to see what commentary the company has on this catalyst.
Berkshire Hathaway also took stakes in Lennar Class A shares and D.R. Horton stock, putting renewed investor focus on homebuilder stocks.
A strong report from KB Home could kickstart a bull case for the sector.
KBH Price Action: KB Home stock is down 0.7% to $62.00 on Tuesday versus a 52-week trading range of $48.90 to $88.86. KB Home stock is down 5.7% year-to-date.
The stock trails the year-to-date performance of both Lennar (-2.9%) and D.R. Horton (+16.8%).
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