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PulteGroup (PHM) Home Sales to Grow Y/Y in Q3 Earnings
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PulteGroup, Inc.’s (PHM - Free Report) Homebuilding segment, accounting for more than 98% of total revenues, is expected to have increased year over year when PHM reports third-quarter 2023 results on Oct 24.
PulteGroup has exhibited a solid performance so far this year, with the stock rising 53%, outperforming the Zacks Building Products - Home Builders industry’s 23.4% increase. It has been benefiting from its focus on entry-level buyers and liquidity protection, prudent management of cash flows and land investment strategy. However, accelerating mortgage rates pose a concern.
Click here to know how the company’s overall third-quarter performance is expected to be.
Image Source: Zacks Investment Research
A Look at Q3 Segmental Performance
PulteGroup's Homebuilding segment is anticipated to have reflected the effects of rising mortgage rates compared with the previous year. However, the persistent scarcity of available existing homes in the market has been fueling the desire for new homes. This surge in demand is expected to have translated into growth in the home sales segment, primarily due to increased home deliveries. Additionally, PulteGroup's judicious land investment approach and its emphasis on catering to entry-level buyers are projected to have worked in the company's favor during the third quarter.
Our model predicts Homebuilding revenues to increase 0.8% to $3.85 billion in the third quarter from $3.82 billion in the third quarter of 2022 but a decrease from $4.1 billion in the prior quarter. Within the Homebuilding umbrella, we expect home sales to be $3.82 billion, reflecting 0.7% year-over-year growth but a decrease of 5.9% sequentially. Land sales are expected to rise 9.4% year over year to $33.6 million in the third quarter but decrease 10.8% sequentially.
PulteGroup expects home deliveries to be within 7,000-7,400 homes versus 7,047 homes delivered a year ago. Our model predicts deliveries to rise 0.3% year over year but decrease 5.9% sequentially to 7,071 units. The decrease reflects the impact of rising mortgage rates.
PHM expects an average selling price or ASP for the quarter to be around $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 $540,100 but remains almost flat sequentially.
Also, the labor market tightened with the limited availability of labor, arresting the rapid growth in housing production. Labor shortages are leading to higher wages, thereby putting pressure on the margins.
From the margin perspective, the company expects home sale 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 as well as sequentially.
PulteGroup anticipates SG&A expenses (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 SG&A expenses to be 9.5% of home sales revenues for the quarter, up from the year-ago level as well as sequentially.
Meanwhile, we expect the company’s new orders to increase 29% year over year to 6,354 units in the quarter but decrease 20% sequentially. Backlog is expected to decline 24.7% year over year to 12,841 units.
Overall Q3 Earnings & Revenue Expectations
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings is currently pegged at $2.78 per share, indicating 3.4% growth from the year-ago figure of $2.69. Also, the consensus mark for revenues is $4.04 billion, suggesting 2.5% year-over-year growth.
PulteGroup, a Zacks Rank #4 (Sell) company, surpassed earnings estimates in 24 of the trailing 27 quarters.
KB Home (KBH - Free Report) reported better-than-expected results in third-quarter fiscal 2023 (ended Aug 31, 2023). Both the earnings and revenues beat the Zacks Consensus Estimate. With this, the company’s earnings and revenues surpassed the consensus mark in three consecutive quarters.
KBH’s net orders grew 52% to 3,097 units from the prior year. The value of net orders was up 54% from the year-ago quarter to $1.51 billion, depicting improved demand conditions and a lower cancelation rate compared with the year-ago period.
Acuity Brands, Inc. (AYI - Free Report) reported mixed results for fourth-quarter fiscal 2023 (ended Aug 31, 2023), wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same. Earnings beat the consensus mark for the 14th consecutive quarter. Revenues missed the same for four quarters in a row following six straight quarters of beat.
Despite a decline in sales in the lighting business, AYI reported strong fiscal fourth-quarter performance driven by increased focus on margins and cash generation. This approach resulted in a higher adjusted operating profit margin and increased adjusted diluted earnings per share.
RPM International Inc. (RPM - Free Report) reported first-quarter fiscal 2024 (ended Aug 31, 2023) results, with earnings and sales beating the Zacks Consensus Estimate.
RPM reported solid quarterly results, with record-breaking sales and an all-time high in adjusted EBIT. This remarkable achievement represents the seventh consecutive quarter of setting new records in both quarterly sales and adjusted EBIT. The growth is driven by its focus on achieving the margin goals outlined in MAP 2025 and effectively utilizing its competitive advantages.
Image: Bigstock
PulteGroup (PHM) Home Sales to Grow Y/Y in Q3 Earnings
PulteGroup, Inc.’s (PHM - Free Report) Homebuilding segment, accounting for more than 98% of total revenues, is expected to have increased year over year when PHM reports third-quarter 2023 results on Oct 24.
PulteGroup has exhibited a solid performance so far this year, with the stock rising 53%, outperforming the Zacks Building Products - Home Builders industry’s 23.4% increase. It has been benefiting from its focus on entry-level buyers and liquidity protection, prudent management of cash flows and land investment strategy. However, accelerating mortgage rates pose a concern.
Click here to know how the company’s overall third-quarter performance is expected to be.
Image Source: Zacks Investment Research
A Look at Q3 Segmental Performance
PulteGroup's Homebuilding segment is anticipated to have reflected the effects of rising mortgage rates compared with the previous year. However, the persistent scarcity of available existing homes in the market has been fueling the desire for new homes. This surge in demand is expected to have translated into growth in the home sales segment, primarily due to increased home deliveries. Additionally, PulteGroup's judicious land investment approach and its emphasis on catering to entry-level buyers are projected to have worked in the company's favor during the third quarter.
Our model predicts Homebuilding revenues to increase 0.8% to $3.85 billion in the third quarter from $3.82 billion in the third quarter of 2022 but a decrease from $4.1 billion in the prior quarter. Within the Homebuilding umbrella, we expect home sales to be $3.82 billion, reflecting 0.7% year-over-year growth but a decrease of 5.9% sequentially. Land sales are expected to rise 9.4% year over year to $33.6 million in the third quarter but decrease 10.8% sequentially.
PulteGroup expects home deliveries to be within 7,000-7,400 homes versus 7,047 homes delivered a year ago. Our model predicts deliveries to rise 0.3% year over year but decrease 5.9% sequentially to 7,071 units. The decrease reflects the impact of rising mortgage rates.
PHM expects an average selling price or ASP for the quarter to be around $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 $540,100 but remains almost flat sequentially.
Also, the labor market tightened with the limited availability of labor, arresting the rapid growth in housing production. Labor shortages are leading to higher wages, thereby putting pressure on the margins.
From the margin perspective, the company expects home sale 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 as well as sequentially.
PulteGroup anticipates SG&A expenses (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 SG&A expenses to be 9.5% of home sales revenues for the quarter, up from the year-ago level as well as sequentially.
Meanwhile, we expect the company’s new orders to increase 29% year over year to 6,354 units in the quarter but decrease 20% sequentially. Backlog is expected to decline 24.7% year over year to 12,841 units.
Overall Q3 Earnings & Revenue Expectations
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings is currently pegged at $2.78 per share, indicating 3.4% growth from the year-ago figure of $2.69. Also, the consensus mark for revenues is $4.04 billion, suggesting 2.5% year-over-year growth.
PulteGroup, a Zacks Rank #4 (Sell) company, surpassed earnings estimates in 24 of the trailing 27 quarters.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
A Few Recent Construction Releases
KB Home (KBH - Free Report) reported better-than-expected results in third-quarter fiscal 2023 (ended Aug 31, 2023). Both the earnings and revenues beat the Zacks Consensus Estimate. With this, the company’s earnings and revenues surpassed the consensus mark in three consecutive quarters.
KBH’s net orders grew 52% to 3,097 units from the prior year. The value of net orders was up 54% from the year-ago quarter to $1.51 billion, depicting improved demand conditions and a lower cancelation rate compared with the year-ago period.
Acuity Brands, Inc. (AYI - Free Report) reported mixed results for fourth-quarter fiscal 2023 (ended Aug 31, 2023), wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same. Earnings beat the consensus mark for the 14th consecutive quarter. Revenues missed the same for four quarters in a row following six straight quarters of beat.
Despite a decline in sales in the lighting business, AYI reported strong fiscal fourth-quarter performance driven by increased focus on margins and cash generation. This approach resulted in a higher adjusted operating profit margin and increased adjusted diluted earnings per share.
RPM International Inc. (RPM - Free Report) reported first-quarter fiscal 2024 (ended Aug 31, 2023) results, with earnings and sales beating the Zacks Consensus Estimate.
RPM reported solid quarterly results, with record-breaking sales and an all-time high in adjusted EBIT. This remarkable achievement represents the seventh consecutive quarter of setting new records in both quarterly sales and adjusted EBIT. The growth is driven by its focus on achieving the margin goals outlined in MAP 2025 and effectively utilizing its competitive advantages.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.