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In the last reported quarter, the company’s earnings per share (EPS) and revenues beat the Zacks Consensus Estimate by 21.5% and 5.9%, respectively. Adjusted EPS and revenues increased 9.9% and 8% on a year-over-year basis, respectively.
PulteGroup’s earnings topped the consensus mark in three of the trailing four quarters and missed on one occasion, the average surprise being 19.5%.
Trend in Estimate Revision
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings has decreased to $2.78 from $2.79 per share over the past 30 days. The estimated figure indicates a 3.4% increase from the year-ago EPS of $2.69. Also, the consensus mark for revenues is $4.04 billion, suggesting 2.4% year-over-year growth.
Low-existing homes for sale have been driving demand for new homes in the market. This tailwind is likely to have helped the company to post higher revenues in the quarter. However, rising mortgage rates will impact the company’s top line to some extent.
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 these 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 partially offset the negatives.
PulteGroup expects home deliveries to be within 7,000-7,400 homes compared with 7,047 homes delivered a year ago. Our model predicts deliveries to grow by a meager 0.3% year over year to 7,071 units.
PHM expects a higher average selling price or ASP for the quarter to be nearly $540,000 compared with the year-ago level of $545,000. Our model predicts the ASP of homes delivered to inch down 0.9% year over year to $540,1000.
We expect the Homebuilding revenues to increase 0.8% to $3.85 billion from $3.82 billion a year ago due to a slight gain in 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, prudent cost-saving efforts might have partly mitigated the risks.
The company expects homebuilding gross margins to contract in the range of 29%-29.5% for third-quarter 2023 from 30.3% 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 29% 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 29% year over year to 6,354 units in the quarter.
What the Zacks Model Unveils
Our proven model does not predict 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 not the case here, as you will see below.
Earnings ESP: PHM has an Earnings ESP of +1.10%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company currently carries a Zacks Rank #4 (Sell).
Stocks With Favorable Combination
Here are some companies in the Zacks Construction sector which, according to our model, have the right combination of elements to post an earnings beat on their respective quarters to be reported.
DY’s earnings for the to-be-reported quarter are expected to grow 4.7%. The company reported better-than-expected earnings in all the last four quarters, with the average surprise being 147.4%.
KBR, Inc. (KBR - Free Report) has an Earnings ESP of +6.36% and carries a Zacks Rank #2.
KBR is expected to register a 12.3% increase in earnings for the to-be-reported quarter. Notably, the company reported better-than-expected earnings in all the last four quarters, with the average surprise being 10.8%.
Construction Partners, Inc. (ROAD - Free Report) has an Earnings ESP of +2.91% and sports a Zacks Rank #1.
ROAD’s earnings topped the consensus mark in three of the last four quarters and missed on one occasion, the average surprise being 10.6%. Earnings for the to-be-reported quarter are expected to rise 108% year over year.
Image: Bigstock
PulteGroup (PHM) Gears Up for Q3 Earnings: What's in Store?
PulteGroup Inc. (PHM - Free Report) is scheduled to report third-quarter 2023 results on Oct 24, before the opening bell.
In the last reported quarter, the company’s earnings per share (EPS) and revenues beat the Zacks Consensus Estimate by 21.5% and 5.9%, respectively. Adjusted EPS and revenues increased 9.9% and 8% on a year-over-year basis, respectively.
PulteGroup’s earnings topped the consensus mark in three of the trailing four quarters and missed on one occasion, the average surprise being 19.5%.
Trend in Estimate Revision
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings has decreased to $2.78 from $2.79 per share over the past 30 days. The estimated figure indicates a 3.4% increase from the year-ago EPS of $2.69. Also, the consensus mark for revenues is $4.04 billion, suggesting 2.4% 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. This tailwind is likely to have helped the company to post higher revenues in the quarter. However, rising mortgage rates will impact the company’s top line to some extent.
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 these 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 partially offset the negatives.
PulteGroup expects home deliveries to be within 7,000-7,400 homes compared with 7,047 homes delivered a year ago. Our model predicts deliveries to grow by a meager 0.3% year over year to 7,071 units.
PHM expects a higher average selling price or ASP for the quarter to be nearly $540,000 compared with the year-ago level of $545,000. Our model predicts the ASP of homes delivered to inch down 0.9% year over year to $540,1000.
We expect the Homebuilding revenues to increase 0.8% to $3.85 billion from $3.82 billion a year ago due to a slight gain in 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, prudent cost-saving efforts might have partly mitigated the risks.
The company expects homebuilding gross margins to contract in the range of 29%-29.5% for third-quarter 2023 from 30.3% 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 29% 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 29% year over year to 6,354 units in the quarter.
What the Zacks Model Unveils
Our proven model does not predict 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 not the case here, as you will see below.
Earnings ESP: PHM has an Earnings ESP of +1.10%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company currently carries a Zacks Rank #4 (Sell).
Stocks With Favorable Combination
Here are some companies in the Zacks Construction sector which, according to our model, have the right combination of elements to post an earnings beat on their respective quarters to be reported.
Dycom Industries (DY - Free Report) has an Earnings ESP of +1.24% and carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
DY’s earnings for the to-be-reported quarter are expected to grow 4.7%. The company reported better-than-expected earnings in all the last four quarters, with the average surprise being 147.4%.
KBR, Inc. (KBR - Free Report) has an Earnings ESP of +6.36% and carries a Zacks Rank #2.
KBR is expected to register a 12.3% increase in earnings for the to-be-reported quarter. Notably, the company reported better-than-expected earnings in all the last four quarters, with the average surprise being 10.8%.
Construction Partners, Inc. (ROAD - Free Report) has an Earnings ESP of +2.91% and sports a Zacks Rank #1.
ROAD’s earnings topped the consensus mark in three of the last four quarters and missed on one occasion, the average surprise being 10.6%. Earnings for the to-be-reported quarter are expected to rise 108% year over year.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.