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In the last reported quarter, the company’s earnings and revenues missed the Zacks Consensus Estimate by 0.6% and 1%, respectively. That said, earnings and revenues increased 36% and 17.7% on a year-over-year basis, respectively.
It is to be noted that the company surpassed earnings estimates in 18 of the trailing 20 quarters.
Trend in Estimate Revision
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings has decreased to $2.29 per share from $2.33 over the past 30 days. Nonetheless, the estimated figure indicates a 53.7% increase from the year-ago earnings of $1.49 per share. Also, the consensus mark for revenues is $4.16 billion, suggesting 30.4% year-over-year growth.
The U.S. housing market has been riding high since the onset of the pandemic (albeit at a slower pace on supply chain challenges) buoyed by a low mortgage rate environment. This apart, the rising trend of work from home owing to the coronavirus outbreak has been prompting many families to purchase a house, thereby boosting demand. Also, PulteGroup has been reaping benefits from the successful execution of initiatives to boost profitability, with a focus on entry-level homes. PulteGroup’s earnings and revenues are expected to have increased in the fourth quarter, given a prudent land investment strategy, focus on entry-level buyers along with a positive housing market trend. PulteGroup expects closings of 8,500 homes for the fourth quarter, indicating 24% year-over-year growth at the midpoint. It expects higher average selling price or ASP for the quarter in the range of $485,000-$490,000, suggesting 10% growth from the year-ago period at the midpoint.
Yet, unprecedented supply chain challenges and labor shortages have been creating hurdles for builders to fulfill orders and deliveries, thereby impacting revenues to some extent.
Overall, the Zacks Consensus Estimate for Homebuilding revenues of $4.05 billion suggests an increase from $3.09 billion a year ago, courtesy of higher ASP and deliveries.
From the margin perspective, input cost inflation and high costs associated with labor and transportation are expected to have weighed on margins to some extent. That said, higher leverage owing to solid demand across each of the buyer groups is expected to have mitigated the risks. As such, given these cost price dynamics, the company expects homebuilding gross margins to expand to 26.7% for fourth-quarter 2021 from 25% reported in the year-ago period.
SG&A expenses (as a percentage of home sales revenues) for the quarter are expected in the 8.9-9.2% range. The figure was 9.7% a year ago.
Overall, higher sales and prices along with improved deliveries and operating leverage are expected to have benefited PulteGroup’s earnings and revenues in the fourth quarter amid continuous supply chain woes.
What Our Model Indicates
Our proven model predicts an earnings beat for PulteGroup this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.
Earnings ESP: The company has an Earnings ESP of +1.88%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Here are some other companies in the Zacks Construction sector, which according to our model have the right combination of elements to post an earnings beat in their respective quarters to be reported.
Boise Cascade Company (BCC - Free Report) has an Earnings ESP of +9.09% and a Zacks Rank #1.
Shares of Boise Cascade have gained 47.8% over the past year. BCC’s earnings topped the consensus mark in all the last four quarters, with the average being 45.5%.
Louisiana-Pacific Corporation (LPX - Free Report) has an Earnings ESP of +1.08% and a Zacks Rank #1.
Shares of Louisiana-Pacific have gained 65.5% over the past year. LPX’s earnings topped the consensus mark in all the last four quarters, with the average being 10.5%.
Martin Marietta Materials, Inc. (MLM - Free Report) has an Earnings ESP of +1.40% and a Zacks Rank #2.
Shares of MLM have gained 29.8% over the past year. In the trailing four quarters, MLM’s earnings topped the consensus mark twice but missed the same on the other two occasions, with the average surprise being 33.4%.
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Is a Beat in the Cards for PulteGroup's (PHM) Q4 Earnings?
PulteGroup Inc. (PHM - Free Report) is scheduled to report fourth-quarter 2021 results on Feb 1, before the opening bell.
In the last reported quarter, the company’s earnings and revenues missed the Zacks Consensus Estimate by 0.6% and 1%, respectively. That said, earnings and revenues increased 36% and 17.7% on a year-over-year basis, respectively.
It is to be noted that the company surpassed earnings estimates in 18 of the trailing 20 quarters.
Trend in Estimate Revision
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings has decreased to $2.29 per share from $2.33 over the past 30 days. Nonetheless, the estimated figure indicates a 53.7% increase from the year-ago earnings of $1.49 per share. Also, the consensus mark for revenues is $4.16 billion, suggesting 30.4% year-over-year growth.
PulteGroup, Inc. Price and EPS Surprise
PulteGroup, Inc. price-eps-surprise | PulteGroup, Inc. Quote
Factors to Note
The U.S. housing market has been riding high since the onset of the pandemic (albeit at a slower pace on supply chain challenges) buoyed by a low mortgage rate environment. This apart, the rising trend of work from home owing to the coronavirus outbreak has been prompting many families to purchase a house, thereby boosting demand. Also, PulteGroup has been reaping benefits from the successful execution of initiatives to boost profitability, with a focus on entry-level homes. PulteGroup’s earnings and revenues are expected to have increased in the fourth quarter, given a prudent land investment strategy, focus on entry-level buyers along with a positive housing market trend. PulteGroup expects closings of 8,500 homes for the fourth quarter, indicating 24% year-over-year growth at the midpoint. It expects higher average selling price or ASP for the quarter in the range of $485,000-$490,000, suggesting 10% growth from the year-ago period at the midpoint.
Yet, unprecedented supply chain challenges and labor shortages have been creating hurdles for builders to fulfill orders and deliveries, thereby impacting revenues to some extent.
Overall, the Zacks Consensus Estimate for Homebuilding revenues of $4.05 billion suggests an increase from $3.09 billion a year ago, courtesy of higher ASP and deliveries.
From the margin perspective, input cost inflation and high costs associated with labor and transportation are expected to have weighed on margins to some extent. That said, higher leverage owing to solid demand across each of the buyer groups is expected to have mitigated the risks. As such, given these cost price dynamics, the company expects homebuilding gross margins to expand to 26.7% for fourth-quarter 2021 from 25% reported in the year-ago period.
SG&A expenses (as a percentage of home sales revenues) for the quarter are expected in the 8.9-9.2% range. The figure was 9.7% a year ago.
Overall, higher sales and prices along with improved deliveries and operating leverage are expected to have benefited PulteGroup’s earnings and revenues in the fourth quarter amid continuous supply chain woes.
What Our Model Indicates
Our proven model predicts an earnings beat for PulteGroup this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.
Earnings ESP: The company has an Earnings ESP of +1.88%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: It currently carries a Zacks Rank #2.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Other Stocks With Favorable Combination
Here are some other companies in the Zacks Construction sector, which according to our model have the right combination of elements to post an earnings beat in their respective quarters to be reported.
Boise Cascade Company (BCC - Free Report) has an Earnings ESP of +9.09% and a Zacks Rank #1.
Shares of Boise Cascade have gained 47.8% over the past year. BCC’s earnings topped the consensus mark in all the last four quarters, with the average being 45.5%.
Louisiana-Pacific Corporation (LPX - Free Report) has an Earnings ESP of +1.08% and a Zacks Rank #1.
Shares of Louisiana-Pacific have gained 65.5% over the past year. LPX’s earnings topped the consensus mark in all the last four quarters, with the average being 10.5%.
Martin Marietta Materials, Inc. (MLM - Free Report) has an Earnings ESP of +1.40% and a Zacks Rank #2.
Shares of MLM have gained 29.8% over the past year. In the trailing four quarters, MLM’s earnings topped the consensus mark twice but missed the same on the other two occasions, with the average surprise being 33.4%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.