5 Insightful Analyst Questions From KB Home’s Q3 Earnings Call

October 01, 2025 at 01:30 AM EDT

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KB Home’s third quarter results were marked by a decline in sales but stronger-than-expected profitability, as management emphasized operational execution and cost control. The company noted steady demand across its communities and highlighted further reductions in build times, which enabled slightly higher deliveries than anticipated. CEO Jeffrey Mezger attributed the quarter’s results to improvements in construction efficiency and disciplined pricing, stating, “We produced total revenues of over $1.6 billion and diluted earnings per share of $1.61,” while also referencing the ongoing transition toward a higher mix of built-to-order homes.

Is now the time to buy KBH? Find out in our full research report (it’s free).

KB Home (KBH) Q3 CY2025 Highlights:

Revenue: $1.62 billion vs analyst estimates of $1.60 billion (7.5% year-on-year decline, 1.2% beat)
Adjusted EPS: $1.61 vs analyst estimates of $1.49 (7.8% beat)
Adjusted EBITDA: $149.8 million vs analyst estimates of $174.2 million (9.2% margin, 14% miss)
The company dropped its revenue guidance for the full year to $6.15 billion at the midpoint from $6.4 billion, a 3.9% decrease
Operating Margin: 8.4%, down from 11.1% in the same quarter last year
Backlog: $1.99 billion at quarter end, down 31.9% year on year
Market Capitalization: $4.12 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 From KB Home’s Q3 Earnings Call

Stephen Kim (Evercore ISI) questioned the decline in average selling price (ASP). President Rob McGibney attributed it primarily to regional and product mix, rather than underlying pricing weakness, and emphasized the focus on margin management.
John Lovallo (UBS) asked about the drivers behind gross margin trends. CFO Rob Dillard explained that strong construction execution, rather than timing or delivery mix, drove Q3 margin outperformance.
Rafe Jadrosich (Bank of America) inquired about the revenue outlook for next year. CEO Jeffrey Mezger declined to provide guidance but indicated that increased community count and improved affordability could set up a stronger year if market conditions cooperate.
Alan Ratner (Zelman & Associates) focused on the build-to-order strategy and margin differentials. Mezger and McGibney detailed that BTO homes can yield margins 250-400 basis points higher than inventory homes and that the transition will be gradual as inventory is worked through.
Trevor Allinson (Wolfe Research) questioned the pricing and volume dynamics in the Southeast. McGibney explained that price reductions were used to address elevated inventory, which successfully drove higher orders and absorption rates in that region.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will watch (1) whether KB Home successfully increases its share of built-to-order sales and sustains margin improvements, (2) the pace and effectiveness of cost reduction initiatives in a potentially fluctuating demand environment, and (3) signs of stabilization or growth in backlog and community count as the spring selling season approaches. The impact of mortgage rate changes and land acquisition strategy will also be key markers of execution.

KB Home currently trades at $63.54, up from $62.39 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free).

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5 Insightful Analyst Questions From KB Home’s Q3 Earnings Call

KB Home (KBH) Q3 CY2025 Highlights:

Our Top 5 Analyst Questions From KB Home’s Q3 Earnings Call

Catalysts in Upcoming Quarters

The Best Stocks for High-Quality Investors

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