Shares of KB Home (NYSE: KBH) dropped 1% on Tuesday. The stock has dropped 14% over the past three months. The homebuilder is slated to report its first quarter 2025 earnings results on Monday, March 24, after the market closes. Here’s a look at what to expect from the quarterly report:
Revenue
Analysts are projecting revenue of $1.5 billion for KBH for the first quarter of 2025, which indicates a growth of over 2% from the same period a year ago. In the fourth quarter of 2024, revenue grew 19% year-over-year to $2 billion.
Earnings
The consensus estimate for earnings per share in Q1 2025 is $1.59, which implies a decline of 10% from the prior-year period. In Q4 2024, EPS increased 36% YoY to $2.52.
Points to note
The housing market is facing a challenging environment due to macroeconomic headwinds weighing on demand. The use of higher incentives to drive demand could put pressure on margins. These factors have somewhat dampened the expectations on KBH’s performance in the first quarter of 2025.
For Q1 2025, KBH expects housing revenues to range between $1.45-1.55 billion. In Q4 2024, housing revenues totaled $1.99 billion, reflecting a 17% increase in homes delivered. The average selling price rose 3% to $501,000 in Q4. The company expects overall average selling price for Q1 2025 to remain flat sequentially.
KBH can be expected to benefit from its built-to-order model, which offers buyers the choice to tailor their homes to suit their needs, and the flexibility to alter their final sales price based on those options. In Q4, over 60% of its deliveries came from built-to-order sales.
At the same time, the homebuilder continues to offer incentives to support home buyers with their purchases. These incentives may weigh on margins. KBH continues to work on reducing its direct costs to offset the impact of these concessions.
KBH expects homebuilding operating income margin to be approx. 9.5% in Q1 2025. Homebuilding operating income margin was 11.5% in Q4. Housing gross profit margin is projected to be 20.0-20.4% in Q1. In Q4, housing gross profit margin increased 20 basis points YoY to 20.9%.