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PulteGroup (PHM) Q2 Earnings Meet, Revenues Miss, Stock Up

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PulteGroup Inc. (PHM - Free Report) reported second-quarter 2021 results, wherein earnings met the Zacks Consensus Estimate but revenues missed the same.

Nonetheless, both earnings and revenues grew year over year buoyed by solid housing market momentum, and limited inventory of new and existing homes. PulteGroup remains optimistic about the company’s prospects, given persistent economic recovery, a positive job market, low interest rates and high level of consumer confidence. Shares of this homebuilder gained 1.2% in the pre-market trading session, following the earnings release.

Ryan Marshall, president and chief executive officer of PulteGroup, highlighted, “With a backlog exceeding 20,000 homes valued at $9.8 billion, I believe the Company is well positioned to realize further gains in the coming quarters as we work to grow our operations and continue to deliver high returns on equity, which totaled 25.7%* for the trailing 12 months.

Inside the Headlines

Adjusted earnings per share came in at $1.72, in line with the consensus mark. Earnings grew 49.6% from $1.15 per share a year ago.

Total revenues of $3.36 billion missed the consensus mark by 4.5%, marking the second consecutive quarter of revenues miss. That said, revenues increased 29.5% from the year-ago figure of $2.59 billion.

PulteGroup, Inc. Price, Consensus and EPS Surprise

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 30.8% year over year to $3.27 billion. Home sale revenues of $3.24 billion also improved 30.9% year over year, mainly due to higher deliveries and average price of homes closed. Land sale revenues improved 22.7% from a year ago to $33.1 million.

The number of homes closed increased 22% year over year to 7,232. Home closings grew across all operating regions served. Average selling price of homes delivered was $447,000, up 7% year over year.

Importantly, its backlog — which represents orders yet to be closed — was 20,056 units, up 52% year over year. In addition, potential housing revenues from backlog increased 70% from the prior-year quarter to $9.8 billion.

Importantly, new home orders grew 28% year over year to 8,322 units for the quarter. Home orders were up across all operating regions served. Value of new orders also improved 59% from a year ago to $4.3 billion.

Margins

Home sales gross margin was up 270 basis points (bps) year over year to 26.6% for the quarter. Furthermore, adjusted operating margin expanded 280 bps to 16.7%, as adjusted homebuilding SG&A expenses (as a percentage of home sales revenues) improved 20 bps year over year to 9.8%.

Revenues from the Financial Services segment declined 4% year over year to $91 million. Pretax income for the segment was down to $51 million from $60 million a year ago. Higher loan volumes were offset by a competitive pricing environment.

Financials

As of Jun 30, 2021, cash and cash equivalents were $1.66 billion, down from $2.58 billion at 2020-end. Debt to total capital of 22.7% at second quarter-end was down from 29.5% at 2020-end. In the quarter, the company repurchased 3.6 million common shares for $200 million, or an average price of $55.84 per share.

Zacks Rank & Peer Releases

PulteGroup currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

D.R. Horton, Inc. (DHI - Free Report) — which currently holds a Zacks Rank #3 — reported impressive results for third-quarter fiscal 2021. Both the top and bottom lines topped the Zacks Consensus Estimate and improved significantly on a year-over-year basis.

NVR, Inc. (NVR - Free Report) — which also holds a Zacks Rank #3 — reported second-quarter 2021 results, wherein both earnings and homebuilding revenues surpassed the Zacks Consensus Estimate as well as improved significantly from the year-ago period.

KB Home (KBH - Free Report) — currently sporting a Zacks Rank #1 — recently reported second-quarter fiscal 2021 results. Although earnings surpassed the Zacks Consensus Estimate, revenues missed the same. Nonetheless, both earnings and revenues grew significantly from a year ago buoyed by strong housing market demand.


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