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Why Is PulteGroup (PHM) Up 1.7% Since the Last Earnings Report?
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It has been about a month since the last earnings report for PulteGroup, Inc. (PHM - Free Report) . Shares have added about 1.7% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
PulteGroup's first-quarter 2017 adjusted earnings of $0.31 per share beat the Zacks Consensus Estimate of $0.28 by 10.7%. Also, quarterly earnings increased 29.2% from the year-ago quarter’s adjusted figure of $0.24 .
Earnings in the quarter under review were adjusted for 3 cents per share, related to 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 higher 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 rose 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.
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.
2017 Guidance
For the second quarter of 2017, Homebuilding gross margin is expected to increase 30 bps to 60 bps sequentially from 23.2% recorded in the first quarter.
Unit closings is anticipated in the 4,850–5,050 range.
For full-year 2017, Homebuilding SG&A ratio is anticipated in the 12.0% to 12.5% range, compared to the previous guidance of 12.5%.
Homebuilding gross margin is now expected at the low end of the 24% to 24.5% range.
Average sale prices are expected to exceed the $400,000 mark.
Effective tax rate is expected to be approximately 36.5%.
Community count growth is anticipated at around 5% to 10%.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month. There has been one revision higher for the current quarter compared to one lower.
At this time, the stock has a nice Growth Score of 'B', though it is lagging a lot on the momentum front with a 'D'. However, the stock was allocated a grade of 'B' on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for value and growth investors.
Outlook
The stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.
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Why Is PulteGroup (PHM) Up 1.7% Since the Last Earnings Report?
It has been about a month since the last earnings report for PulteGroup, Inc. (PHM - Free Report) . Shares have added about 1.7% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
PulteGroup Q1 Earnings Beat, Gross Margin Declines
PulteGroup's first-quarter 2017 adjusted earnings of $0.31 per share beat the Zacks Consensus Estimate of $0.28 by 10.7%. Also, quarterly earnings increased 29.2% from the year-ago quarter’s adjusted figure of $0.24 .
Earnings in the quarter under review were adjusted for 3 cents per share, related to 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 higher 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 rose 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.
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.
2017 Guidance
For the second quarter of 2017, Homebuilding gross margin is expected to increase 30 bps to 60 bps sequentially from 23.2% recorded in the first quarter.
Unit closings is anticipated in the 4,850–5,050 range.
For full-year 2017, Homebuilding SG&A ratio is anticipated in the 12.0% to 12.5% range, compared to the previous guidance of 12.5%.
Homebuilding gross margin is now expected at the low end of the 24% to 24.5% range.
Average sale prices are expected to exceed the $400,000 mark.
Effective tax rate is expected to be approximately 36.5%.
Community count growth is anticipated at around 5% to 10%.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month. There has been one revision higher for the current quarter compared to one lower.
PulteGroup, Inc. Price and Consensus
PulteGroup, Inc. Price and Consensus | PulteGroup, Inc. Quote
VGM Scores
At this time, the stock has a nice Growth Score of 'B', though it is lagging a lot on the momentum front with a 'D'. However, the stock was allocated a grade of 'B' on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for value and growth investors.
Outlook
The stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.