Here's our initial take on KB Home's (NYSE: KBH) fiscal 2025 second-quarter financial report.

Key Metrics

KB Home Wrestles With a Soft Housing Market

KB Home's management described the homebuilder's financial performance for the fiscal second quarter (ending May 31) as "solid," but there's no doubt that things are tough in the housing market. Revenue was down 11% year over year as the number of homes that KB Home delivered during the quarter fell by the same percentage. Net income plunged 36% as the homebuilder dealt with lower profit margins and higher overhead costs, and it took sizable repurchases of stock to cut the decline in earnings on a per-share basis to 30%. The company also had to offer larger concessions in order to get homebuyers to move forward with purchases.

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CEO Jeff Mezger tried to find good things about the challenges KB Home faces. The CEO pointed to shorter build times and lower construction costs as having been valuable in keeping KB Home operations going. At the same time, though, the company is cutting back on land acquisition and development investments as it waits for market conditions to improve. That, in turn, is freeing up more money for share buybacks. KB Home spent $200 million to repurchase stock at an average cost of about $54 per share. At that price, purchases boost book value, which is another positive.

It's not apparent when conditions in housing will improve. KB Home's guidance for fiscal 2025 includes revenue of between $6.3 billion and $6.5 billion, with average selling prices remaining in the $480,000-to-$490,000 range. That implies some level of bounceback in the second half of the fiscal year, but that seems far from certain at this point, given macroeconomic pressures and continued high interest rates.

Immediate Market Reaction

KB Home shares responded negatively to the report despite the company posting quarterly results that topped expectations. The stock fell about 2% in the first hour of trading in the after-hours market late Monday following the release. At this point, investors seem to be comfortable with the declines in key metrics that KB Home has already suffered, but they want to see clearer signs that an end is in sight.

What to Watch

Even once housing market conditions improve, it could take a while for KB Home to get back up to speed. Backlogs have fallen precipitously, going from 6,270 homes 12 months ago to just 4,776 currently. The value of that backlog is down 27% to $2.29 billion. Cancellation rates have grown as well, rising to 16% from 13% a year ago. Inventories have also risen, indicating weak demand.

None of these factors affect the long-term thesis for KB Home, with structural shortages in available housing having a sizable impact across the U.S. in many fast-growing markets. In the meantime, KB Home hopes that now will prove to be an astute time to make major stock repurchases to add shareholder value even when its core business is going through short-term challenges.

Helpful Resources

• Full earnings report
• Investor relations page
• Additional podcast coverage of homebuilder and solar stocks

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Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool recommends KB Home and recommends the following options: short July 2025 $60 calls on KB Home. The Motley Fool has a disclosure policy.

Here's our initial take on CarMax's (NYSE: KMX) fiscal 2026 first-quarter financial report.

Key Metrics

CarMax Stays Strong Across the Business

There were a lot of good things to see in CarMax's financial report for the first quarter of its 2026 fiscal year. Total vehicle unit sales were up nearly 6% year over year, lifted by extremely strong performance on the retail side. Comparable store used unit sales were up 8.1% from the year-ago period, and total revenue from retail used vehicles climbed 7.5%. The company bought 336,000 vehicles from consumers and dealers during the quarter, up 7%, and revenue from the sale of extended protection plans on used vehicles got an 11% boost.

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The biggest news came on the bottom line. Earnings of $1.38 per share were up 42%, as CarMax largely kept cost increases in check. Expense management efforts played a key role, along with stronger gross profit figures on its retail sales.

CarMax CEO Bill Nash put the results into perspective, noting that the latest quarter was the fourth consecutive period of positive retail comps and double-digit percentage gains in earnings per share. Nash attributed much of the gains to CarMax's workers and investment in technology, citing digital capabilities as supporting 80% of retail sales. Only 14% of sales occurred completely online, but the remainder used online channels to reserve, finance, trade in, or create a sales order for a vehicle.

Immediate Market Reaction

Investors reacted positively to the good news, sending CarMax shares up nearly 11% in the first hour of premarket trading after releasing its financial report on Friday morning. In particular, most of those following the used-car specialist had anticipated much less extensive growth in earnings.

The bounce higher came as CarMax stock had been trading near its worst levels in two years. Fears about consumer sentiment had caused some to question whether buyers would step in to purchase CarMax vehicles. The results showed that despite macroeconomic pressures, consumers were prone to be opportunistic about making purchases even on terms that were attractive for CarMax.

What to Watch

A couple of other notable things stood out in the report. First, CarMax opened two new stand-alone centers for auctions and vehicle reconditioning, one near Phoenix and the other near Dallas. These two facilities should help support relatively strong markets in those areas.

Also, CarMax accelerated its stock repurchase activity, spending $200 million to buy back about 3 million shares. That leaves the company with $1.74 billion of unspent but authorized capacity to do future repurchases. Shareholders should see that as a reflection of CarMax's belief that attractive industry conditions could last quite a while into the future.

Helpful Resources

• Full earnings report
• Investor relations page

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Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends CarMax. The Motley Fool has a disclosure policy.

Here's our initial take on Paycom Software's (NYSE: PAYC) first-quarter financial report.

Key Metrics

Paycom Moves Forward More Slowly

Paycom issued an upbeat financial report for the first quarter of 2025, even though investors had to settle for slower growth rates than they've seen in the past. Revenue came in up a bit over $30 million from year-ago levels, and that caused growth rates to fall from double-digit percentages in the fourth quarter to mid-single-digit percentages. Similarly, growth in adjusted net income was fairly sluggish, although adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) managed to post a 10% gain year over year.

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Founder/CEO Chad Richison's comments were generally similar to what he's been saying in past quarters. The leader emphasized the role that automation is playing in the business and pointed to measures to make Paycom's internal business more efficient as well as greater efforts to boost sales conversions.

Paycom also modestly boosted its full-year 2025 guidance. The company now expects between $2.023 billion and $2.038 billion in revenue for the year, up between $3 million and $8 million from previous projections. Adjusted EBITDA got a much larger boost of $18 million to $23 million, setting a new range of $843 million to $858 million.

Immediate Market Reaction

Even with the somewhat slow growth rate, Paycom managed to exceed lowered expectations among investors. It therefore wasn't surprising to see the stock climb about 2% in the first hour of after-hours trading Wednesday afternoon following the report's release.

Unlike many software stocks, Paycom has stayed relatively close to its highest levels from late 2024. However, the shares remain well below their 2021 peak, reflecting the reset in expectations investors have made as growth has slowed.

What to Watch

Investors will want to keep a close eye on future results from Paycom as the company's clients adjust to changing macroeconomic conditions. Many economists are forecasting a possible recession. If businesses need to cut back on software spending to make ends meet, Paycom could see further pressure on future sales gains.

In the meantime, though, Paycom will have to redouble its efforts to get its sales team to close deals effectively and efficiently. At some point, investors will want to see Paycom's growth accelerate considerably to get the stock moving more assertively in the right direction.

Helpful Resources

• Full earnings release
• Investor relations page
• Watch this Fool.com video on whether Paycom is a buy

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Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Paycom Software. The Motley Fool has a disclosure policy.

Here's our initial take on Axon Enterprise's (NASDAQ: AXON) first-quarter financial report.

Key Metrics

Axon Stays on Target

Axon got good results in the first quarter of 2025, setting a new record for quarterly revenue and seeing year-over-year sales growth top 25% for the 13th quarter in a row. Just about all of Axon's products and services pulled their weight, as sales of connected devices rose 26% and Taser-related revenue was up 19%. Personal sensors had stronger revenue gains of 30%, and the new platform solutions segment grew at a faster-than-50% clip. Axon pointed to the Taser 10 system, the Axon Body 4 sensor, and various virtual-reality and drone equipment as particularly strong contributors to top-line gains.

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Beyond the numbers, Axon was excited about the product rollouts it has recently made in support of public safety. With the 10th annual installment of its Axon Week user conference last month, the company presented its Axon Vehicle Intelligence platform, which incorporates capabilities like expanded video, automated license plate recognition, livestreaming, real-time alerts, and camera systems, including the Outpost fixed camera and the Lightpost streetlight camera.

Other features include the artificial intelligence (AI)-powered, voice-activated Axon Assistant for real-time translation, internet access, and assistance with established policies and protocols. In addition, through collaborations with third-party providers, like the Ring doorbell camera system, Axon intends to bring public and private safety networks together for the greater good.

Immediate Market Reaction

Investors were pleased with what they saw from Axon. The stock was up more than 6% in the first 30 minutes of after-hours trading on Wednesday following the release of the report. With the move upward, the stock is poised to return to its best levels since the stock market started a broader decline in mid-February.

The move higher was reasonable, given the more modest growth expectations most shareholders seemed to have. A $0.17 per share earnings beat and sales at about $18 million higher than the consensus forecast got a positive reception.

What to Watch

Axon also pushed its guidance higher for the full 2025 year. The company now expects revenue of between $2.6 billion and $2.7 billion, which would mark about a 27% growth rate compared to 2024's final figures. That was a $50 million push higher, and adjusted earnings before interest, taxes, depreciation, and amortization got a roughly $5 million to $10 million boost to a new range of $650 million to $675 million.

Axon isn't afraid to invest in its future, with spending plans for between $160 million and $180 million this year. That should help the company stay on the cutting edge of research and development, which could, in turn, be essential in putting Axon in the best possible position to keep growing.

Helpful Resources

• Full 2025 Q1 shareholder letter and investor presentation
• Investor relations page
• Recent Fool.com coverage of whether Axon is still a good buy

Should you invest $1,000 in Axon Enterprise right now?

Before you buy stock in Axon Enterprise, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Axon Enterprise wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $623,103!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $717,471!*

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Dan Caplinger has positions in Axon Enterprise. The Motley Fool has positions in and recommends Axon Enterprise. The Motley Fool has a disclosure policy.