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Pricing to Aid PulteGroup's (PHM) Homebuilding in Q2 Earnings
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PulteGroup, Inc.’s (PHM - Free Report) Homebuilding segment, accounting for more than 97% of total revenues, is expected to have registered growth, mainly attributable to higher housing prices. Consequently, the segment is likely to contribute to overall revenues when it reports second-quarter 2022 results on Jul 26.
PulteGroup has exhibited a solid performance so far this year, with the stock outperforming the Zacks Building Products - Home Builders industry. The company has been riding high on its focus on entry-level buyers and protecting liquidity, prudent management of cash flows as well as the land investment strategy. However, accelerating mortgage rates and continuous supply-chain issues pose a concern.
Click here to know how the company’s overall Q2 performance is expected to be.
Image Source: Zacks Investment Research
A Look at Q2 Segmental Performance
PulteGroup’s Homebuilding segment is expected to have registered growth, courtesy of a higher average selling price or ASP.
The Zacks Consensus Estimate for Homebuilding revenues of $3.96 billion suggests an increase of 21.1% on a year-over-year basis.
PulteGroup expects ASP within $525,000-$535,000, indicating an increase from $447,000 registered a year ago. It expects home deliveries within 7,200-7,600, indicating a decline from 7,232 homes delivered a year ago.
The consensus mark for ASP is $531,000, which points to a 18.8% year-over-year improvement. For the quarter to be reported, the consensus mark for the number of homes closed is 7,314, which points to a 1.1% year-over-year increase.
A prudent land investment strategy and focus on entry-level buyers are expected to have benefited PulteGroup in the second quarter. However, rising mortgage rates might have impacted the demand for homes in the second quarter, which is expected to have reflected in the quarterly sales for homes. Also, the company has been witnessing supply-chain challenges that are resulting in construction-related delays. The labor market tightened with the limited availability of labor, arresting the rapid growth in housing production. These headwinds might have impacted the upcoming results to some extent.
Nonetheless, improved operating leverage and higher pricing are expected to have mitigated the risks. As such, given these cost price dynamics, PHM expects homebuilding gross margins to expand between 29.5-30% for second-quarter 2022 from 26.6% reported in the year-ago period.
SG&A expenses (as a percentage of home sales revenues) for the quarter are expected in the 9.4-9.6% range. The figure was 9.8% a year ago.
Overall Q2 Earnings & Revenues Expectations
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings is currently pegged at $2.58 per share, indicating 50% growth from the year-ago figure of $1.72. Also, the consensus mark for revenues is $4.03 billion, suggesting 19.9% year-over-year growth.
PulteGroup, a Zacks Rank #5 (Strong Sell) company, surpassed earnings estimates in 20 of the trailing 22 quarters.
DHI also lowered its revenue guidance for the full year, given expected completion dates of homes under construction and current market conditions.
UFP Industries, Inc. (UFPI - Free Report) reported stellar second-quarter 2022 results. Both earnings and net sales beat the Zacks Consensus Estimate and increased on a year-over-year basis.
UFPI expects that its balanced business model and operational improvements will continue to help it navigate new challenges like rising interest rates and historically high inflation. In the near term, it expects more normalized demand in its largest segment — retail solutions — but year-over-year improvement in the third quarter.
Fastenal Company (FAST - Free Report) reported second-quarter 2022 results, wherein earnings came in line with the Zacks Consensus Estimate but revenues missed the mark.
That said, FAST’s top and bottom lines improved on a year-over-year basis, given strong demand for manufacturing and construction equipment and supplies, along with higher pricing.
Image: Bigstock
Pricing to Aid PulteGroup's (PHM) Homebuilding in Q2 Earnings
PulteGroup, Inc.’s (PHM - Free Report) Homebuilding segment, accounting for more than 97% of total revenues, is expected to have registered growth, mainly attributable to higher housing prices. Consequently, the segment is likely to contribute to overall revenues when it reports second-quarter 2022 results on Jul 26.
PulteGroup has exhibited a solid performance so far this year, with the stock outperforming the Zacks Building Products - Home Builders industry. The company has been riding high on its focus on entry-level buyers and protecting liquidity, prudent management of cash flows as well as the land investment strategy. However, accelerating mortgage rates and continuous supply-chain issues pose a concern.
Click here to know how the company’s overall Q2 performance is expected to be.
Image Source: Zacks Investment Research
A Look at Q2 Segmental Performance
PulteGroup’s Homebuilding segment is expected to have registered growth, courtesy of a higher average selling price or ASP.
The Zacks Consensus Estimate for Homebuilding revenues of $3.96 billion suggests an increase of 21.1% on a year-over-year basis.
PulteGroup expects ASP within $525,000-$535,000, indicating an increase from $447,000 registered a year ago. It expects home deliveries within 7,200-7,600, indicating a decline from 7,232 homes delivered a year ago.
The consensus mark for ASP is $531,000, which points to a 18.8% year-over-year improvement. For the quarter to be reported, the consensus mark for the number of homes closed is 7,314, which points to a 1.1% year-over-year increase.
A prudent land investment strategy and focus on entry-level buyers are expected to have benefited PulteGroup in the second quarter. However, rising mortgage rates might have impacted the demand for homes in the second quarter, which is expected to have reflected in the quarterly sales for homes. Also, the company has been witnessing supply-chain challenges that are resulting in construction-related delays. The labor market tightened with the limited availability of labor, arresting the rapid growth in housing production. These headwinds might have impacted the upcoming results to some extent.
Nonetheless, improved operating leverage and higher pricing are expected to have mitigated the risks. As such, given these cost price dynamics, PHM expects homebuilding gross margins to expand between 29.5-30% for second-quarter 2022 from 26.6% reported in the year-ago period.
SG&A expenses (as a percentage of home sales revenues) for the quarter are expected in the 9.4-9.6% range. The figure was 9.8% a year ago.
Overall Q2 Earnings & Revenues Expectations
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings is currently pegged at $2.58 per share, indicating 50% growth from the year-ago figure of $1.72. Also, the consensus mark for revenues is $4.03 billion, suggesting 19.9% year-over-year growth.
PulteGroup, a Zacks Rank #5 (Strong Sell) company, surpassed earnings estimates in 20 of the trailing 22 quarters.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
A Few Recent Construction Releases
D.R. Horton, Inc.’s (DHI - Free Report) third-quarter fiscal 2022 earnings beat the Zacks Consensus Estimate but revenues missed the same.
DHI also lowered its revenue guidance for the full year, given expected completion dates of homes under construction and current market conditions.
UFP Industries, Inc. (UFPI - Free Report) reported stellar second-quarter 2022 results. Both earnings and net sales beat the Zacks Consensus Estimate and increased on a year-over-year basis.
UFPI expects that its balanced business model and operational improvements will continue to help it navigate new challenges like rising interest rates and historically high inflation. In the near term, it expects more normalized demand in its largest segment — retail solutions — but year-over-year improvement in the third quarter.
Fastenal Company (FAST - Free Report) reported second-quarter 2022 results, wherein earnings came in line with the Zacks Consensus Estimate but revenues missed the mark.
That said, FAST’s top and bottom lines improved on a year-over-year basis, given strong demand for manufacturing and construction equipment and supplies, along with higher pricing.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.