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PulteGroup, Inc. (PHM) - free report >>
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PulteGroup, Inc. (PHM) - free report >>
SPDR S&P Homebuilders ETF (XHB) - free report >>
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Earnings Preview of PulteGroup (PHM): ETFs in Focus
Homebuilder PulteGroup Inc. (PHM - Free Report) is likely to report on Oct 24. The company conducts operations through two primary business segments – Homebuilding (which accounted for 98.1% as of 2022 total revenues) and Financial Services (1.9%). Earnings of homebuilders are very crucial this reporting season as higher interest rates have been playing a spoilsport for the housing industry.
PulteGroup has an Earnings ESP of +1.10% and a Zacks Rank #4 (Sell). According to our methodology, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter. Notably, the company has a top-most VGM (value-Growth-Momentum) score of “A.”
The current consensus estimate for earnings of PulteGroup is $2.78, up from $2.10 three months ago. But earnings estimate has fallen by a cent in the past two months. Meanwhile, the Most Accurate Estimate is $2.81. PulteGroup is expected to witness a sales expansion of 2.41% this quarter and earnings expansion of 3.35%.
Pros & Cons Ahead of Earnings Release
The cancellation rate has been subsiding. The Zacks Consensus estimate for the metric is 13% for the third-quarter, down from 24% in year-ago period. The Zacks Consensus estimate for the new net orders $3.57 billion, up 45% year over year. However, the Zacks Consensus estimate for average selling price is $540, down from $545 recorded in the year-ago period.
There is weakness in backlog. The Zacks Consensus estimate for the metric is 13,059 for the third-quarter, down from 17,053 in year-ago period. But then, the value for backlog has the likelihood of gaining. Higher land, labor and material costs are threatening margins as they limit homebuilders’ pricing power.
ETFs in Focus
Against this backdrop, investors can keep a watch on PulteGroup-heavy ETFs like iShares U.S. Home Construction ETF (ITB - Free Report) , Invesco Building & Construction ETF (PKB - Free Report) and SPDR S&P Homebuilders ETF (XHB - Free Report) . PulteGroup holds 7.24% of ITB, 5% of PKB and 3.7% of XHB, respectively.