KB Home KBH used its second-quarter fiscal 2026earnings callto press a single message — the company’s return to a built-to-order model is now far enough to support better visibility, steadier deliveries and improving margins in the back half of fiscal 2026.
That message mattered because the quarter still reflected a difficult spring selling season. KB Home reported revenues of $1.11 billion, which beat the Zacks Consensus Estimate of $1.09 billion by 2%. The company reported earnings per share of $0.43, meeting the consensus mark.
KB Home Price, Consensus and EPS Surprise
KB Home price-consensus-eps-surprise-chart | KB Home Quote
KB Home Pushes Built-to-Order Deeper
Executive chairman Jeffrey Mezger said that the fiscal second-quarter results met or exceeded the midpoint of the key guidance ranges, but management spent more time explaining the structural benefits of built-to-order than recapping quarterly figures. Mezger framed the shift as a lower-risk operating model that improves delivery predictability and margin quality.
Chief executive officer Rob McGibney said that 73% of fiscal second-quarter net orders were built-to-order homes, which he described as evidence that the company is rebuilding a sold backlog before construction begins. McGibney said that creates visibility on buyer, price, costs and expected close date much earlier in the cycle.
McGibney also tied the strategy to cost control.
KBH Sees Back-Half Margin Recovery
The quarter itself showed why management is leaning on that transition. Housing revenues fell 27% year over year to $1.11 billion, while the housing gross margin was 15.2%, down from 19.3% a year earlier. Excluding inventory-related charges, the gross margin was 15.7%.
Still, chief accounting officer William Hollinger laid out a more constructive second-half setup. Hollinger guided to a fiscal third-quarter housing gross margin of 16-16.6% and a full-year margin of 16.1-16.5%, assuming no inventory-related charges.
Hollinger said that the improvement should come from better operating leverage, a higher mix of built-to-order deliveries and a more favorable West Coast mix, particularly from Northern California. He added that more than 80% of expected fiscal third-quarter deliveries were already in backlog, reinforcing the company’s visibility argument.
KB Home Uses Cash for Land & Buybacks
Management also emphasized balance sheet flexibility. KB Home ended the quarter with $1.12 billion of total liquidity, including about $200 million in cash and no debt maturities until June 2027.
Mezger said that the company remained balanced in capital allocation, investing for growth while returning capital to shareholders. KB Home repurchased 1.4 million shares for $75 million in the quarter and paid out roughly $15 million in dividends.
Land spending stayed active but disciplined. Management said that the fiscal second-quarter land acquisition and development investment was just under $500 million, with roughly three-fourths directed to development and fees on land already owned.
KBH Q&A Focuses on California & Demand
Analysts pressed hardest on two points in Q&A: how much of the expected margin step-up comes from built-to-order versus California and whether spring demand softness has extended into June. Management’s answers were steady and more explicit than in prepared remarks.
Responding to Barclays and Evercore ISI, McGibney said that fiscal fourth-quarter built-to-order deliveries should reach roughly 70%, but not yet the full target rate. He also described the Bay Area contribution as more than a one-quarter event, saying that the region now has a healthier pipeline of larger, higher-ASP communities.
On demand, management acknowledged that March was the weakest month of the spring season, while April and May improved. McGibney said that June trends were tracking in line with expectations and reflected a normal seasonal slowdown rather than a fresh deterioration.
KB Home Reenters Atlanta Carefully
Beyond the near term, Mezger highlighted Atlanta as the company’s latest market reentry. He called it a top-10 housing market with strong population and job growth, and said that KB Home has already acquired its first parcel there for an early 2027 opening.
That move fits management’s broader growth posture. The company expected Seattle, Boise and Charlotte to represent about 10% of the fiscal 2026 volume, showing how KB Home is still willing to expand, but within a familiar operating template.
At the same time, executives stressed discipline in the land market. McGibney said that the company has walked away from optioned deals that no longer met return hurdles, even as sellers have begun to grow more realistic on terms and pricing.
KBH Keeps the Focus on Execution
The clearest takeaway from the call was not that conditions have turned easy. Management repeatedly pointed to weak consumer confidence, elevated mortgage rates and affordability pressure as continuing obstacles.
What changed was the company’s confidence in its operating setup. Faster build times, lower finished unsold inventory and sequential backlog growth gave executives a firmer basis to talk about improving deliveries, margins and backlog comparisons through the rest of fiscal 2026.
Zacks Rank & Style Signals
KBH currently carries a Zacks Rank #4 (Sell), along with a Value Score of B, a Growth Score of C, a Momentum Score of A and a VGM Score of A. Under Zacks’ framework, Style Scores help identify attractive value, growth and momentum traits, but they are meant to complement, not override, the rank.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The above-mentioned combination leaves a mixed signal. The strong Momentum and VGM grades indicate favorable style characteristics, but Zacks’ guidance says stocks with a Zacks Rank #4 or #5 (Strong Sell) should not be favored even when Style Scores are strong. The rank can also change as earnings estimate revisions adjust after the quarter’s results and management outlook.
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This article originally published on Zacks Investment Research (zacks.com).
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