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PulteGroup (PHM) Shares Surge on Q2 Earnings & Revenue Beat
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PulteGroup Inc.’s (PHM - Free Report) shares gained 6% after the company reported second-quarter 2020 results, wherein earnings and revenues handily surpassed the Zacks Consensus Estimate, buoyed by a recovery in demand. Ryan Marshall, president and chief executive officer of PulteGroup, pointed out, “The recovery in demand reflects a number of factors, including: low interest rates, a restricted supply of existing-home inventory, pent-up demand following the economic shutdown, the appeal of single-family living in a new home and a desire among some buyers to exit more densely populated urban centers.”
Inside the Headlines
Adjusted earnings per share came in at $1.15, beating the consensus mark of 84 cents by 36.9%. The bottom line also grew 33.7% year over year.
Total revenues of $2.59 billion surpassed the consensus mark of $2.54 billion by 2% and increased 4.2% from the year-ago figure of $2.49 billion.
PulteGroup, Inc. Price, Consensus and EPS Surprise
PulteGroup primarily operates through two business segments — Homebuilding and Financial Services.
Revenues from the Homebuilding segment were up 2.7% year over year to $2.5 billion. Home sale revenues of $2.47 billion also improved 2.8% year over year, given higher deliveries. However, land sale revenues declined 8.5% from a year ago to $27 million.
The number of homes closed increased 6% year over year to 5,937. Home closings grew across most of the operating regions served (barring Northeast and Midwest). Average selling price of homes delivered was $416,000, down 3% year over year due to the company’s shift in the product mix to include more first-time homebuyers.
Importantly, its backlog — which represents orders yet to be closed — was 13,214, up 12% year over year. In addition, potential housing revenues from backlog increased 13.3% from the prior-year quarter to $5.79 billion.
However, new home orders decreased 4% year over year to 6,522 units in the quarter. Home orders were down across all operating regions served (except Florida and Texas). Value of new orders also declined 7.4% from a year ago to $2.68 billion.
Margins
Home sales gross margin was up 80 basis points (bps) year over year to 23.9% in the quarter. Furthermore, operating margin also expanded 370 bps to 16%.
Adjusted homebuilding SG&A expenses — as a percentage of home sale revenues — were 10%, down 80 bps from the prior-year quarter.
Revenues from the Financial Services segment improved 69.4% year over year to $94.8 million. The segment generated a pre-tax income of $60.4 million, up 140.9% from $25.1 million a year ago.
Financials
As of Jun 30, 2020, cash and cash equivalents were $1.66 billion, up from $1.22 billion at 2019-end. It repaid the $700 million it borrowed from the revolving credit facility in March 2020. Given economic uncertainties, it has opted to suspend all stock repurchase activities.
Recent Peer Releases
KB Home (KBH - Free Report) , currently carrying a Zacks Rank #3 (Hold), reported lackluster results for second-quarter fiscal 2020 (ended May 31, 2020), wherein earnings and revenues lagged the respective Zacks Consensus Estimate. On a year-over-year basis, its bottom line increased while top line declined on lower deliveries and average selling price.
Lennar Corporation (LEN - Free Report) , another #3 Ranked stock, reported better-than-expected results for second-quarter fiscal 2020 (ended May 31, 2020), defying unprecedented health crisis and significant business disruptions over the past three months. This marks the fifth consecutive quarter of an earnings beat.
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
PulteGroup (PHM) Shares Surge on Q2 Earnings & Revenue Beat
PulteGroup Inc.’s (PHM - Free Report) shares gained 6% after the company reported second-quarter 2020 results, wherein earnings and revenues handily surpassed the Zacks Consensus Estimate, buoyed by a recovery in demand. Ryan Marshall, president and chief executive officer of PulteGroup, pointed out, “The recovery in demand reflects a number of factors, including: low interest rates, a restricted supply of existing-home inventory, pent-up demand following the economic shutdown, the appeal of single-family living in a new home and a desire among some buyers to exit more densely populated urban centers.”
Inside the Headlines
Adjusted earnings per share came in at $1.15, beating the consensus mark of 84 cents by 36.9%. The bottom line also grew 33.7% year over year.
Total revenues of $2.59 billion surpassed the consensus mark of $2.54 billion by 2% and increased 4.2% from the year-ago figure of $2.49 billion.
PulteGroup, Inc. Price, Consensus and EPS Surprise
PulteGroup, Inc. price-consensus-eps-surprise-chart | PulteGroup, Inc. Quote
Segment Discussion
PulteGroup primarily operates through two business segments — Homebuilding and Financial Services.
Revenues from the Homebuilding segment were up 2.7% year over year to $2.5 billion. Home sale revenues of $2.47 billion also improved 2.8% year over year, given higher deliveries. However, land sale revenues declined 8.5% from a year ago to $27 million.
The number of homes closed increased 6% year over year to 5,937. Home closings grew across most of the operating regions served (barring Northeast and Midwest). Average selling price of homes delivered was $416,000, down 3% year over year due to the company’s shift in the product mix to include more first-time homebuyers.
Importantly, its backlog — which represents orders yet to be closed — was 13,214, up 12% year over year. In addition, potential housing revenues from backlog increased 13.3% from the prior-year quarter to $5.79 billion.
However, new home orders decreased 4% year over year to 6,522 units in the quarter. Home orders were down across all operating regions served (except Florida and Texas). Value of new orders also declined 7.4% from a year ago to $2.68 billion.
Margins
Home sales gross margin was up 80 basis points (bps) year over year to 23.9% in the quarter. Furthermore, operating margin also expanded 370 bps to 16%.
Adjusted homebuilding SG&A expenses — as a percentage of home sale revenues — were 10%, down 80 bps from the prior-year quarter.
Revenues from the Financial Services segment improved 69.4% year over year to $94.8 million. The segment generated a pre-tax income of $60.4 million, up 140.9% from $25.1 million a year ago.
Financials
As of Jun 30, 2020, cash and cash equivalents were $1.66 billion, up from $1.22 billion at 2019-end. It repaid the $700 million it borrowed from the revolving credit facility in March 2020. Given economic uncertainties, it has opted to suspend all stock repurchase activities.
Recent Peer Releases
KB Home (KBH - Free Report) , currently carrying a Zacks Rank #3 (Hold), reported lackluster results for second-quarter fiscal 2020 (ended May 31, 2020), wherein earnings and revenues lagged the respective Zacks Consensus Estimate. On a year-over-year basis, its bottom line increased while top line declined on lower deliveries and average selling price.
Lennar Corporation (LEN - Free Report) , another #3 Ranked stock, reported better-than-expected results for second-quarter fiscal 2020 (ended May 31, 2020), defying unprecedented health crisis and significant business disruptions over the past three months. This marks the fifth consecutive quarter of an earnings beat.
Zacks Rank
PulteGroup — which shares space with D.R. Horton, Inc. (DHI - Free Report) in the Zacks Building Products - Home Builders industry — currently has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>