Looking back on home builders stocks’ Q2 earnings, we examine this quarter’s best and worst performers, including KB Home (NYSE: KBH) and its peers.
Traditionally, homebuilders have built competitive advantages with economies of scale that lead to advantaged purchasing and brand recognition among consumers. Aesthetic trends have always been important in the space, but more recently, energy efficiency and conservation are driving innovation. However, these companies are still at the whim of the macro, specifically interest rates that heavily impact new and existing home sales. In fact, homebuilders are one of the most cyclical subsectors within industrials.
The 12 home builders stocks we track reported a satisfactory Q2. As a group, revenues beat analysts’ consensus estimates by 4.1%.
Luckily, home builders stocks have performed well with share prices up 18.7% on average since the latest earnings results.
KB Home (NYSE: KBH)
The first homebuilder to be listed on the NYSE, KB Home (NYSE: KB) is a homebuilding company targeting the first-time home buyer and move-up buyer markets.
KB Home reported revenues of $1.53 billion, down 10.5% year on year. This print exceeded analysts’ expectations by 1.6%. Despite the top-line beat, it was still a slower quarter for the company with a significant miss of analysts’ EBITDA estimates and a significant miss of analysts’ backlog estimates.
“Our second quarter financial performance was solid, with results meeting or exceeding our guidance ranges, as we continue to navigate the current environment. Our team is producing improvements in two key areas, lowering our build times and reducing direct construction costs, helping to strengthen our business,” said Jeffrey Mezger, Chairman and Chief Executive Officer.
KB Home delivered the weakest full-year guidance update of the whole group. Interestingly, the stock is up 26.5% since reporting and currently trades at $67.50.
Read our full report on KB Home here, it’s free.
Best Q2: Champion Homes (NYSE: SKY)
Founded in 1951, Champion Homes (NYSE: SKY) is a manufacturer of modular homes and buildings in North America.
Champion Homes reported revenues of $701.3 million, up 11.7% year on year, outperforming analysts’ expectations by 9.2%. The business had an incredible quarter with a solid beat of analysts’ sales volume estimates and a beat of analysts’ EPS estimates.
Champion Homes pulled off the fastest revenue growth among its peers. The market seems happy with the results as the stock is up 17.1% since reporting. It currently trades at $77.51.
Is now the time to buy Champion Homes? Access our full analysis of the earnings results here, it’s free.
Weakest Q2: Lennar (NYSE: LEN)
One of the largest homebuilders in America, Lennar (NYSE: LEN) is known for constructing affordable, move-up, and retirement homes across a range of markets and communities.
Lennar reported revenues of $8.38 billion, down 4.4% year on year, exceeding analysts’ expectations by 1.1%. Still, it was a softer quarter as it posted a significant miss of analysts’ adjusted operating income estimates and a significant miss of analysts’ EBITDA estimates.
Interestingly, the stock is up 30.5% since the results and currently trades at $142.73.
Read our full analysis of Lennar’s results here.
NVR (NYSE: NVR)
Known for its unique land acquisition strategy, NVR (NYSE: NVR) is a respected homebuilder and mortgage company in the United States.
NVR reported revenues of $2.60 billion, flat year on year. This number beat analysts’ expectations by 5.4%. Taking a step back, it was a mixed quarter as it also produced a solid beat of analysts’ adjusted operating income estimates but a significant miss of analysts’ EBITDA estimates.
The stock is up 8.1% since reporting and currently trades at $8,543.
Read our full, actionable report on NVR here, it’s free.
Installed Building Products (NYSE: IBP)
Founded in 1977, Installed Building Products (NYSE: IBP) is a company specializing in the installation of insulation, waterproofing, and other complementary building products for residential and commercial construction.
Installed Building Products reported revenues of $760.3 million, up 3.1% year on year. This print topped analysts’ expectations by 6.7%. It was an incredible quarter as it also recorded a solid beat of analysts’ EBITDA estimates and an impressive beat of analysts’ adjusted operating income estimates.
The stock is up 32% since reporting and currently trades at $279.40.
Read our full, actionable report on Installed Building Products here, it’s free.
Market Update
The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty for 2025.
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