We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
In the last reported quarter, the company’s earnings per share (EPS) beat the Zacks Consensus Estimate by 4.3% but revenues missed the same by 1%. Adjusted EPS and revenues increased 7.8% and 2.8% on a year-over-year basis, respectively.
PulteGroup’s earnings topped the consensus mark in all the trailing four quarters, the average surprise being 21%.
Trend in Estimate Revision
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings has remained unchanged at $3.20 per share over the past 30 days. The estimated figure indicates an 11.9% decrease from the year-ago EPS of $3.63. Also, the consensus mark for revenues is $4.48 billion, suggesting a 13.3% year-over-year decline.
Challenging affordability conditions due to higher rates would likely impact the company’s fourth-quarter revenues compared with the year-ago period. Higher mortgage rates will impact the company’s top line in the quarter. This, along with the slight shift in its mix toward build-to-order homes (which won’t deliver until 2024), is an added headwind for the quarter. The company’s earnings and revenues are expected to have reflected these headwinds. That said, 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 partly mitigate the headwind in the quarter.
Moreover, 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 approximately 8,000 units compared with 8,848 homes delivered a year ago. Our model predicts deliveries to decline 9.5% year over year to 8,011 units.
PHM expects a higher average selling price or ASP for the quarter between $540,000 and $550,000 compared with the year-ago level of $571,000. Our model predicts the ASP of homes delivered to inch down 4.1% year over year to $547,600.
We expect the Homebuilding revenues to decrease 11.4% to $4.43 billion from $5.01 billion a year ago due to lower deliveries and ASP.
From the margin perspective, high costs associated with labor 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 be in the range of 29%-29.5% for fourth-quarter 2023 compared with 29.4% reported in the year-ago period. Given the higher rates, demand and cost dynamics, PHM expects to be toward the lower end of this range in the quarter. Our model predicts homebuilding gross margins to be 29.4% for the quarter, the same as the year-ago period.
The company anticipates SG&A (as a percentage of home sales revenues) to be in the range of 8.8%, lower than 9.1% reported in the prior-year quarter. Our model predicts homebuilding SG&A expenses to be 8.8% for the quarter, up from the year-ago level.
Meanwhile, we expect the company’s new orders to increase 64% year over year to 6,500 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 -0.74%. 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 #2.
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.
LPX’s earnings for the to-be-reported quarter are expected to decline 18%. The company reported better-than-expected earnings in three of the last four quarters but missed on one occasion, the average surprise being 98.3%.
Martin Marietta Materials, Inc. (MLM - Free Report) has an Earnings ESP of +1.45% and carries a Zacks Rank #3.
MLM’s earnings topped the consensus mark in all the last four quarters, with the average being 37.3%. Earnings for the to-be-reported quarter are expected to rise 30.6% year over year.
Vulcan Materials Company (VMC - Free Report) has an Earnings ESP of +0.45% and carries a Zacks Rank #3.
VMC’s earnings topped the consensus mark in three of the last four quarters and missed on one occasion, with the average being 13.6%. Earnings for the to-be-reported quarter are expected to grow 25% year over year.
Image: Bigstock
Factors Setting the Tone for PulteGroup's (PHM) Q4 Earnings
PulteGroup Inc. (PHM - Free Report) is scheduled to report fourth-quarter 2023 results on Jan 30, before the opening bell.
In the last reported quarter, the company’s earnings per share (EPS) beat the Zacks Consensus Estimate by 4.3% but revenues missed the same by 1%. Adjusted EPS and revenues increased 7.8% and 2.8% on a year-over-year basis, respectively.
PulteGroup’s earnings topped the consensus mark in all the trailing four quarters, the average surprise being 21%.
Trend in Estimate Revision
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings has remained unchanged at $3.20 per share over the past 30 days. The estimated figure indicates an 11.9% decrease from the year-ago EPS of $3.63. Also, the consensus mark for revenues is $4.48 billion, suggesting a 13.3% year-over-year decline.
PulteGroup, Inc. Price and EPS Surprise
PulteGroup, Inc. price-eps-surprise | PulteGroup, Inc. Quote
Factors to Note
Challenging affordability conditions due to higher rates would likely impact the company’s fourth-quarter revenues compared with the year-ago period. Higher mortgage rates will impact the company’s top line in the quarter. This, along with the slight shift in its mix toward build-to-order homes (which won’t deliver until 2024), is an added headwind for the quarter. The company’s earnings and revenues are expected to have reflected these headwinds. That said, 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 partly mitigate the headwind in the quarter.
Moreover, 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 approximately 8,000 units compared with 8,848 homes delivered a year ago. Our model predicts deliveries to decline 9.5% year over year to 8,011 units.
PHM expects a higher average selling price or ASP for the quarter between $540,000 and $550,000 compared with the year-ago level of $571,000. Our model predicts the ASP of homes delivered to inch down 4.1% year over year to $547,600.
We expect the Homebuilding revenues to decrease 11.4% to $4.43 billion from $5.01 billion a year ago due to lower deliveries and ASP.
From the margin perspective, high costs associated with labor 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 be in the range of 29%-29.5% for fourth-quarter 2023 compared with 29.4% reported in the year-ago period. Given the higher rates, demand and cost dynamics, PHM expects to be toward the lower end of this range in the quarter. Our model predicts homebuilding gross margins to be 29.4% for the quarter, the same as the year-ago period.
The company anticipates SG&A (as a percentage of home sales revenues) to be in the range of 8.8%, lower than 9.1% reported in the prior-year quarter. Our model predicts homebuilding SG&A expenses to be 8.8% for the quarter, up from the year-ago level.
Meanwhile, we expect the company’s new orders to increase 64% year over year to 6,500 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 -0.74%. 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 #2.
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.
Louisiana-Pacific Corporation (LPX - Free Report) has an Earnings ESP of +6.43% and carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.
LPX’s earnings for the to-be-reported quarter are expected to decline 18%. The company reported better-than-expected earnings in three of the last four quarters but missed on one occasion, the average surprise being 98.3%.
Martin Marietta Materials, Inc. (MLM - Free Report) has an Earnings ESP of +1.45% and carries a Zacks Rank #3.
MLM’s earnings topped the consensus mark in all the last four quarters, with the average being 37.3%. Earnings for the to-be-reported quarter are expected to rise 30.6% year over year.
Vulcan Materials Company (VMC - Free Report) has an Earnings ESP of +0.45% and carries a Zacks Rank #3.
VMC’s earnings topped the consensus mark in three of the last four quarters and missed on one occasion, with the average being 13.6%. Earnings for the to-be-reported quarter are expected to grow 25% year over year.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.