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In the last reported quarter, the company’s earnings per share (EPS) and revenues beat the Zacks Consensus Estimate by 32% and 9.4%, respectively. Adjusted EPS and revenues increased 28.4% and 13.5% on a year-over-year basis, respectively.
Notably, PHM surpassed earnings estimates in 23 of the trailing 26 quarters.
Trend in Estimate Revision
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings has increased to $2.45 from $2.41 per share over the past 60 days. The estimated figure indicates a 10.3% decrease from the year-ago earnings of $2.73 per share. Also, the consensus mark for revenues is $3.96 million, suggesting 0.8% year-over-year growth.
Low-existing homes for sale have been driving demand for new homes in the market. Although this tailwind is likely to have helped the company to post sequentially higher revenues in the quarter, rising mortgage rates will impact the year-over-year comparison.
Overall, the uncertain economic scenario, material cost inflation and higher wages are making the U.S. housing market less affordable. The company’s earnings and revenues are expected to have reflected the above-mentioned headwinds.
Nonetheless, PulteGroup’s execution of initiatives to boost profitability, with a focus on entry-level homes, prudent land investment strategy and affordable product offerings, are expected to have offset the negatives to some extent.
PulteGroup expects home deliveries to be within 7,000-7,400 homes compared with 7,177 homes delivered a year ago. Our model predicts deliveries to decline 2.1% year over year to 7,026 units.
PHM expects a higher average selling price or ASP for the quarter in the range of $525,000-$535,000 compared with the year-ago level of $531,000. Our model predicts the ASP of homes delivered to inch up 0.7% year over year to $534,600.
We expect the Homebuilding revenues to decrease 0.2% to $3.79 billion from $3.8 billion a year ago due to lower 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 pricing and prudent cost-saving efforts might have partly mitigated the risks.
The company expects homebuilding gross margins to contract in the range of 27.5%-28% for second-quarter 2023 from 30.9% reported in the year-ago period. Although construction costs remain elevated otherwise, the gross margin of the quarter is likely to have reflected the benefits of lower lumber costs that are flowing through PHM’s operations. Our model predicts homebuilding gross margins to be 27.6% for the quarter, down from the year-ago period.
The company anticipates SG&A (as a percentage of home sales revenues) to be in the range of 9-9.5% versus 9.2% in the prior-year quarter. Our model predicts homebuilding SG&A expenses to be 9.5% for the quarter, up from the year-ago level.
Meanwhile, we expect the company’s new orders to increase 9.4% year over year to 7,019 units in the quarter.
What the Zacks Model Unveils
Our proven model predicts an earnings beat for PulteGroup for the quarter to be reported. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is exactly the case here, as you will see below.
Earnings ESP: PHM has an Earnings ESP of +1.17%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company currently sports a Zacks Rank #1.
Other Stocks With Favorable Combination
Here are some companies in the Zacks Construction sector, according to our model, have the right combination of elements to post an earnings beat on their respective quarters to be reported.
BCC’s earnings for the to-be-reported quarter are expected to decline 53.7%. The company reported better-than-expected earnings in three of the last four quarters and missed on other one occasion, with the average surprise being 19%.
Vulcan Materials Company (VMC - Free Report) has an Earnings ESP of +5.94% and carries a Zacks Rank #2.
VMC is expected to register a 25.5% increase in earnings for the to-be-reported quarter. Notably, the company reported better-than-expected earnings in two of the last four quarters and missed on other two occasions, with the average surprise being 7.1%.
Taylor Morrison Home Corporation (TMHC - Free Report) has an Earnings ESP of +2.41% and a Zacks Rank #2.
TMHC’s earnings topped the consensus mark in all the last four quarters, the average being 17.3%. Earnings for the to-be-reported quarter are expected to decline 26.9% year over year.
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PulteGroup (PHM) to Report Q2 Earnings: What's in Store?
PulteGroup Inc. (PHM - Free Report) is scheduled to report second-quarter 2023 results on Jul 25, before the opening bell.
In the last reported quarter, the company’s earnings per share (EPS) and revenues beat the Zacks Consensus Estimate by 32% and 9.4%, respectively. Adjusted EPS and revenues increased 28.4% and 13.5% on a year-over-year basis, respectively.
Notably, PHM surpassed earnings estimates in 23 of the trailing 26 quarters.
Trend in Estimate Revision
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings has increased to $2.45 from $2.41 per share over the past 60 days. The estimated figure indicates a 10.3% decrease from the year-ago earnings of $2.73 per share. Also, the consensus mark for revenues is $3.96 million, suggesting 0.8% year-over-year growth.
PulteGroup, Inc. Price and EPS Surprise
PulteGroup, Inc. price-eps-surprise | PulteGroup, Inc. Quote
Factors to Note
Low-existing homes for sale have been driving demand for new homes in the market. Although this tailwind is likely to have helped the company to post sequentially higher revenues in the quarter, rising mortgage rates will impact the year-over-year comparison.
Overall, the uncertain economic scenario, material cost inflation and higher wages are making the U.S. housing market less affordable. The company’s earnings and revenues are expected to have reflected the above-mentioned headwinds.
Nonetheless, PulteGroup’s execution of initiatives to boost profitability, with a focus on entry-level homes, prudent land investment strategy and affordable product offerings, are expected to have offset the negatives to some extent.
PulteGroup expects home deliveries to be within 7,000-7,400 homes compared with 7,177 homes delivered a year ago. Our model predicts deliveries to decline 2.1% year over year to 7,026 units.
PHM expects a higher average selling price or ASP for the quarter in the range of $525,000-$535,000 compared with the year-ago level of $531,000. Our model predicts the ASP of homes delivered to inch up 0.7% year over year to $534,600.
We expect the Homebuilding revenues to decrease 0.2% to $3.79 billion from $3.8 billion a year ago due to lower 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 pricing and prudent cost-saving efforts might have partly mitigated the risks.
The company expects homebuilding gross margins to contract in the range of 27.5%-28% for second-quarter 2023 from 30.9% reported in the year-ago period. Although construction costs remain elevated otherwise, the gross margin of the quarter is likely to have reflected the benefits of lower lumber costs that are flowing through PHM’s operations. Our model predicts homebuilding gross margins to be 27.6% for the quarter, down from the year-ago period.
The company anticipates SG&A (as a percentage of home sales revenues) to be in the range of 9-9.5% versus 9.2% in the prior-year quarter. Our model predicts homebuilding SG&A expenses to be 9.5% for the quarter, up from the year-ago level.
Meanwhile, we expect the company’s new orders to increase 9.4% year over year to 7,019 units in the quarter.
What the Zacks Model Unveils
Our proven model predicts an earnings beat for PulteGroup for the quarter to be reported. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is exactly the case here, as you will see below.
Earnings ESP: PHM has an Earnings ESP of +1.17%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company currently sports a Zacks Rank #1.
Other Stocks With Favorable Combination
Here are some companies in the Zacks Construction sector, according to our model, have the right combination of elements to post an earnings beat on their respective quarters to be reported.
Boise Cascade Company (BCC - Free Report) has an Earnings ESP of +2.36% and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
BCC’s earnings for the to-be-reported quarter are expected to decline 53.7%. The company reported better-than-expected earnings in three of the last four quarters and missed on other one occasion, with the average surprise being 19%.
Vulcan Materials Company (VMC - Free Report) has an Earnings ESP of +5.94% and carries a Zacks Rank #2.
VMC is expected to register a 25.5% increase in earnings for the to-be-reported quarter. Notably, the company reported better-than-expected earnings in two of the last four quarters and missed on other two occasions, with the average surprise being 7.1%.
Taylor Morrison Home Corporation (TMHC - Free Report) has an Earnings ESP of +2.41% and a Zacks Rank #2.
TMHC’s earnings topped the consensus mark in all the last four quarters, the average being 17.3%. Earnings for the to-be-reported quarter are expected to decline 26.9% year over year.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.