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5 Reasons to Add PulteGroup (PHM) to Your Portfolio Now
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The 2017 outlook for the U.S. homebuilding industry is quite compelling given the affordable interest rates, an improving economy, modest wage growth, low unemployment levels and positive consumer confidence.
Though rising interest and mortgage rates, tedious underwriting standards as well as land and labor shortages raise concern, a healthy supply-demand balance is expected to boost demand.
Taking the positives into consideration, PulteGroup, Inc. (PHM - Free Report) is a company that has exhibited considerable strength in several areas and makes an attractive investment pick. This homebuilder engages in the homebuilding and financial services businesses, primarily in the U.S.
With assets of over $7.15 billion, PulteGroup benefits from its value-creation strategy as it focuses on generating solid returns, maintaining strong margins, with balanced approach across its portfolio and capital allocation plans.
What’s Working in Favor of the Stock?
Share Price Movement: Shares of PulteGroup gained 24% in the last one year, outperforming 17.9% gain of the Zacks categorized Building-Residential/Commercial industry. In fact, in the last three months, the company’s stock price has gained over 23% versus 16.4% growth for the broader industry.
The company’s value-creation strategy, prudent land investments and strategic initiatives should drive growth in the upcoming quarters as well.
Compelling Valuation: PulteGroup has slightly underperformed the broader construction sector over the last one year which suggests a value-oriented path ahead. We find the price-to-book ratio as the best multiple for valuing homebuilders because of their asset-driven nature.
PulteGroup currently has a trailing 12 month P/B ratio of 1.59. This level compares favorably to what the sector has witnessed over the last one year, as the current P/B for the sector is at 4.18. Hence, its lower-than-market positioning calls for more upside in the quarters ahead.
Earnings Growth: PulteGroup has a solid 3-5 year earnings per share growth rate of 14%. This earnings momentum will likely continue in the near term, as reflected by the company’s projected EPS growth of 32.1% for the current year and 19.6% for the next year.
As part of the company’s newly announced next phase of its Value Creation initiatives, originally launched in 2011, PulteGroup will lower land spend and instead use the extra cash flow to drive overhead leverage and share buyback activity. All these initiatives bode well for accelerated earnings growth over the next several quarters.
Estimate Revisions: Over the past 60 days, the Zacks Consensus Estimate for PulteGroup increased 9.9% to $2.23 per share for 2017 and 9.4% to $2.67 per share for 2018. The positive earnings estimate revisions indicate analysts’ confidence and substantiate the Zacks Rank #1 (Strong Buy) for the stock. You can see the complete list of today’s Zacks #1 Rank stocks here.
Also, PulteGroup beat earnings estimates in all of the past four quarters, the average being 13.49%. The company’s restructuring and strategic initiatives should drive the stock’s performance in the upcoming quarters as well.
Solid ROE: PulteGroup’s trailing twelve-month Return on Equity (ROE) ratio is 12.29% compared with the industry average of 11%. This indicates that the company reinvests more efficiently as compared to its peer group.
NVR and Louisiana-Pacific sport a Zacks Rank #1. Full-year 2017 earnings for NVR are expected to increase 23.6% and that for Louisiana-Pacific 71.4%.
D.R. Horton carries a Zacks Rank #2 (Buy). It is expected to witness 15.6% growth in fiscal 2017 earnings.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>
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5 Reasons to Add PulteGroup (PHM) to Your Portfolio Now
The 2017 outlook for the U.S. homebuilding industry is quite compelling given the affordable interest rates, an improving economy, modest wage growth, low unemployment levels and positive consumer confidence.
Though rising interest and mortgage rates, tedious underwriting standards as well as land and labor shortages raise concern, a healthy supply-demand balance is expected to boost demand.
Taking the positives into consideration, PulteGroup, Inc. (PHM - Free Report) is a company that has exhibited considerable strength in several areas and makes an attractive investment pick. This homebuilder engages in the homebuilding and financial services businesses, primarily in the U.S.
With assets of over $7.15 billion, PulteGroup benefits from its value-creation strategy as it focuses on generating solid returns, maintaining strong margins, with balanced approach across its portfolio and capital allocation plans.
What’s Working in Favor of the Stock?
Share Price Movement: Shares of PulteGroup gained 24% in the last one year, outperforming 17.9% gain of the Zacks categorized Building-Residential/Commercial industry. In fact, in the last three months, the company’s stock price has gained over 23% versus 16.4% growth for the broader industry.
The company’s value-creation strategy, prudent land investments and strategic initiatives should drive growth in the upcoming quarters as well.
Compelling Valuation: PulteGroup has slightly underperformed the broader construction sector over the last one year which suggests a value-oriented path ahead. We find the price-to-book ratio as the best multiple for valuing homebuilders because of their asset-driven nature.
PulteGroup currently has a trailing 12 month P/B ratio of 1.59. This level compares favorably to what the sector has witnessed over the last one year, as the current P/B for the sector is at 4.18. Hence, its lower-than-market positioning calls for more upside in the quarters ahead.
Earnings Growth: PulteGroup has a solid 3-5 year earnings per share growth rate of 14%. This earnings momentum will likely continue in the near term, as reflected by the company’s projected EPS growth of 32.1% for the current year and 19.6% for the next year.
As part of the company’s newly announced next phase of its Value Creation initiatives, originally launched in 2011, PulteGroup will lower land spend and instead use the extra cash flow to drive overhead leverage and share buyback activity. All these initiatives bode well for accelerated earnings growth over the next several quarters.
Estimate Revisions: Over the past 60 days, the Zacks Consensus Estimate for PulteGroup increased 9.9% to $2.23 per share for 2017 and 9.4% to $2.67 per share for 2018. The positive earnings estimate revisions indicate analysts’ confidence and substantiate the Zacks Rank #1 (Strong Buy) for the stock. You can see the complete list of today’s Zacks #1 Rank stocks here.
Also, PulteGroup beat earnings estimates in all of the past four quarters, the average being 13.49%. The company’s restructuring and strategic initiatives should drive the stock’s performance in the upcoming quarters as well.
Solid ROE: PulteGroup’s trailing twelve-month Return on Equity (ROE) ratio is 12.29% compared with the industry average of 11%. This indicates that the company reinvests more efficiently as compared to its peer group.
Other Stocks that are Worth to Look
Investors may also consider stocks like NVR, Inc. (NVR - Free Report) , Louisiana-Pacific Corporation (LPX - Free Report) and D.R. Horton, Inc. (DHI - Free Report) .
NVR and Louisiana-Pacific sport a Zacks Rank #1. Full-year 2017 earnings for NVR are expected to increase 23.6% and that for Louisiana-Pacific 71.4%.
D.R. Horton carries a Zacks Rank #2 (Buy). It is expected to witness 15.6% growth in fiscal 2017 earnings.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>