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PulteGroup, Inc. (PHM - Analyst Report) is set to report its fourth-quarter fiscal 2013 results on Jan 30 before the market opens. Last quarter, Pulte posted a positive surprise of 32.35%. Let’s see how things are shaping up for this announcement.

Factors to Consider This Quarter

Strong margins and pricing at Pulte have been driving the homebuilder’s earnings. However, the company has been witnessing weak order growth due to lower community count and higher interest rates. The company has intentionally slowed down sales pace across some of its communities due to lack of land development and scarcity of finished lots. Instead the company is focusing more on driving price and margins in most communities. As such this trend is expected to continue in the upcoming quarter. Other homebuilders like D.R Horton, Inc. (DHI - Analyst Report) and Hovnanian Enterprises, Inc. also experienced weak orders in the past few quarters.  

Earnings Whisper?

Our proven model does not conclusively show that PulteGroup is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here, as you will see below.

Zacks ESP: The Earnings ESP is 0.00%.  

Zacks Rank: PulteGroup carries a Zacks Rank #3 (Hold) which when combined with a 0.00% ESP makes surprise prediction difficult. We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Here are some other companies from the construction sector which you may consider, as our model shows they have the right combination of elements to post an earnings beat this quarter:

Meritage Homes Corp. (MTH - Snapshot Report), with an Earnings ESP of +1.96% and a Zacks Rank #3 (Hold).

Primoris Services Corp. (PRIM - Snapshot Report), with an Earnings ESP of +10.26% and a Zacks Rank #3 (Hold).

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