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PulteGroup Inc.’s (PHM - Free Report) first-quarter 2017 adjusted earnings of 31 cents per share beat the Zacks Consensus Estimate of 28 cents by 10.7%. Also, quarterly earnings increased 29.2% from the year-ago quarter’s adjusted figure of 24 cents.
Earnings in the quarter under review were adjusted for 3 cents per share, related to the resolution of certain insurance matters.
PulteGroup’s total revenue of $1.63 billion missed the Zacks Consensus Estimate of $1.77 billion by 7.9%. Revenues were however up 13.9% year over year on an increase in the number of homes delivered.
Segment Details
The company conducts operations through two primary business segments – Homebuilding and Financial Services.
Homebuilding revenues rose 14.4% year over year to $1.59 billion. The company stated that overall housing demand remained positive. It believes that continued favorable trends in the economy, job growth, demographics and consumer confidence can more than offset the impact of modestly higher rates, allowing the housing recovery to continue at a steady pace.
Home sale revenues of $1.58 billion increased 14% year over year on increased home closings and average selling price. Land sale revenues of $1.6 million decreased 34% from $2.5 million a year ago.
The number of homes closed increased 7% year over year to 4,225. Home closings increased across all operating regions of the company – Southeast, Florida, Midwest, Texas and West – barring Northeast. Average selling price (ASP) of homes delivered was $375,000, up 6% year over year.
The company’s backlog, which represents orders yet to be closed, was 9,323, up 6.5% year over year. Potential housing revenues from backlog increased 11.7% to $3.8 billion. Backlog value was driven by a 6% increase in average sales price of backlogs.
New home orders increased 8% year over year to 6,126 in the quarter. Home orders increased across all operating regions, including Northeast. Value of new orders increased 16% year over year to $2.4 billion.
Margins
Home sales’ gross margin decreased 230 basis points year over year to 23.2%.
SG&A expenses, as percentage of home sale revenues, were 14.9 % (inclusive of $15 million of expenses associated with the resolution of certain insurance matters) compared with 17.4% reported in the prior-year quarter.
Revenues from the Financial Services segment increased 16.8% year over year to $41.8 million. The segment generated pre-tax income of $14 million, higher than $10 million in the prior-year quarter, driven by higher closing volumes in homebuilding operations. Mortgage capture rate in the quarter was 80%, compared with 81% in the prior-year quarter.
PulteGroup, Inc. Price, Consensus and EPS Surprise
D.R. Horton, Inc. (DHI - Free Report) exhibited an impressive performance in the second quarter of fiscal 2017, with earnings and revenues beating the Zacks Consensus Estimate by 1.7% and 5.2%, respectively.
NVR, Inc. (NVR - Free Report) reported first-quarter 2017 earnings of $25.12 per share, surpassing the Zacks Consensus Estimate by 27.3%. The reported figure also rose 59% from the year-ago profit level.
Upcoming Release in the Construction Sector
Louisiana-Pacific Corp. (LPX - Free Report) is scheduled to release its quarterly numbers on May 5. The Zacks Consensus Estimate for earnings is pegged at 29 cents, an increase of 319.1% on a year-over-year basis.
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PulteGroup (PHM) Q1 Earnings Beat, Gross Margin Declines
PulteGroup Inc.’s (PHM - Free Report) first-quarter 2017 adjusted earnings of 31 cents per share beat the Zacks Consensus Estimate of 28 cents by 10.7%. Also, quarterly earnings increased 29.2% from the year-ago quarter’s adjusted figure of 24 cents.
Earnings in the quarter under review were adjusted for 3 cents per share, related to the resolution of certain insurance matters.
PulteGroup’s total revenue of $1.63 billion missed the Zacks Consensus Estimate of $1.77 billion by 7.9%. Revenues were however up 13.9% year over year on an increase in the number of homes delivered.
Segment Details
The company conducts operations through two primary business segments – Homebuilding and Financial Services.
Homebuilding revenues rose 14.4% year over year to $1.59 billion. The company stated that overall housing demand remained positive. It believes that continued favorable trends in the economy, job growth, demographics and consumer confidence can more than offset the impact of modestly higher rates, allowing the housing recovery to continue at a steady pace.
Home sale revenues of $1.58 billion increased 14% year over year on increased home closings and average selling price. Land sale revenues of $1.6 million decreased 34% from $2.5 million a year ago.
The number of homes closed increased 7% year over year to 4,225. Home closings increased across all operating regions of the company – Southeast, Florida, Midwest, Texas and West – barring Northeast. Average selling price (ASP) of homes delivered was $375,000, up 6% year over year.
The company’s backlog, which represents orders yet to be closed, was 9,323, up 6.5% year over year. Potential housing revenues from backlog increased 11.7% to $3.8 billion. Backlog value was driven by a 6% increase in average sales price of backlogs.
New home orders increased 8% year over year to 6,126 in the quarter. Home orders increased across all operating regions, including Northeast. Value of new orders increased 16% year over year to $2.4 billion.
Margins
Home sales’ gross margin decreased 230 basis points year over year to 23.2%.
SG&A expenses, as percentage of home sale revenues, were 14.9 % (inclusive of $15 million of expenses associated with the resolution of certain insurance matters) compared with 17.4% reported in the prior-year quarter.
Revenues from the Financial Services segment increased 16.8% year over year to $41.8 million. The segment generated pre-tax income of $14 million, higher than $10 million in the prior-year quarter, driven by higher closing volumes in homebuilding operations. Mortgage capture rate in the quarter was 80%, compared with 81% in the prior-year quarter.
PulteGroup, Inc. Price, Consensus and EPS Surprise
PulteGroup, Inc. Price, Consensus and EPS Surprise | PulteGroup, Inc. Quote
Financials
As of Mar 31, 2017, cash and cash equivalents were $397.8 million, down from $698.9 million at 2016-end.
During the quarter, PulteGroup repurchased 4.7 million common shares for $100 million, at an average price of $21.30 per share.
Zacks Rank
PulteGroup carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Peer Releases
D.R. Horton, Inc. (DHI - Free Report) exhibited an impressive performance in the second quarter of fiscal 2017, with earnings and revenues beating the Zacks Consensus Estimate by 1.7% and 5.2%, respectively.
NVR, Inc. (NVR - Free Report) reported first-quarter 2017 earnings of $25.12 per share, surpassing the Zacks Consensus Estimate by 27.3%. The reported figure also rose 59% from the year-ago profit level.
Upcoming Release in the Construction Sector
Louisiana-Pacific Corp. (LPX - Free Report) is scheduled to release its quarterly numbers on May 5. The Zacks Consensus Estimate for earnings is pegged at 29 cents, an increase of 319.1% on a year-over-year basis.
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors.
Click here for Zacks' private trades >>