KB Home Q3 2026 earnings: profit beats estimates as deliveries and margins slide
KB Home beat profit expectations in its fiscal Q3 2026 even as sales and margins fell, while a rebounding backlog hinted at steadying demand.
| Q3 2026 | Reported | Expected | Surprise |
|---|---|---|---|
| EPS | $1.05 | $0.90 | +16.4% |
| Revenue | $1.30B | $1.31B | -0.7% |
Key takeaways
- Earnings per share came in well above what analysts had penciled in, even though quarterly profit and revenue both fell sharply from a year ago — a sign that cost control and buybacks cushioned a tougher sales environment rather than growth driving the beat.
- Homes delivered dropped 19% to 2,732 and revenue fell 20% year over year, while the average price of homes sold stayed roughly flat around $473,000 — meaning the decline was driven by fewer homes sold, not price cuts.
- Profitability narrowed: the housing gross margin slipped to 16.5% and the homebuilding operating margin fell to 5.2% from 8.1% a year earlier, continuing a longer-run margin squeeze also visible in the trailing-year figures, as higher incentives and financing costs ate into what the company keeps from each home sold.
- Net income fell to $65.3 million from $109.8 million a year ago, roughly matching the pace of profit decline seen over the past year.
- Net new orders fell 12%, but the backlog of homes under contract and awaiting completion rose to 4,398 homes worth $2.05 billion — its first increase in four years, which management and analysts flagged as an early sign that demand may be stabilizing even as current-quarter sales stayed soft.
- The company reaffirmed its full-year guidance of 10,500 to 11,000 home deliveries and $4.90 billion to $5.30 billion in revenue, signaling it doesn’t expect the rest of the year to deviate much from its earlier outlook.
- Management said housing market conditions have “continued to be challenging” and have “weakened since our June earnings report,” pointing to higher mortgage rates further pressuring affordability and making prospective buyers more cautious.
- KB Home ended the quarter with $942.4 million in liquidity and a debt-to-capital ratio of 35.7%, and it repurchased $50 million of its own stock during the quarter, indicating the company kept returning cash to shareholders despite the slowdown.
Q3 2026 in context
| Metric | Aug 2026 | Aug 2025 | Change |
|---|---|---|---|
| Revenue | $1.3B | $1.6B | -20.0% |
| Net income | $65M | $110M | -40.6% |
| Free cash flow | -$145M | $186M | -178.0% |
| Diluted EPS | $1.05 | $1.61 | -34.8% |
| Net margin | 5.0% | 6.8% | -1.7 pts |
Figures for the quarter ended Aug 2026 and the quarter ended Aug 2025, as reported to the SEC.
How the stock took it
KB Home closed at $47.86 on Sep 21, 2026, the last session before the report, and at $47.15 on Sep 23, 2026, the first session after it — -1.5% across the report.
Closes from the market's daily record. Each figure spans the report date — from the last session that closed before it to the first that closed after — because a company may report before the open or after the close.
Fundamentals
| Metric | Value | Period |
|---|---|---|
| Gross margin | 17.0% | Trailing 12 months |
| Operating margin | 6.0% | Trailing 12 months |
| Net profit margin | 4.9% | Trailing 12 months |
| Pretax margin | 6.4% | Trailing 12 months |
| EPS | $4.14 | Trailing 12 months |
| Revenue growth (YoY) | -17.5% | Trailing 12 months |
| EPS growth (YoY) | -45.5% | Trailing 12 months |
| Return on equity | 7.0% | Trailing 12 months |
Sources: company report · reputable coverage