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In the last reported quarter, the company’s earnings per share (EPS) beat the Zacks Consensus Estimate by 2.5% but revenues missed the same by 4.2%. However, adjusted EPS and revenues decreased 14.8% and 15.5% on a year-over-year basis, respectively.
PulteGroup’s earnings topped the consensus mark in all the trailing four quarters, the average surprise being 15.1%.
Trend in Estimate Revision
The Zacks Consensus Estimate for the to-be-reported quarter’s EPS has increased to $2.36 from $2.35 over the past 60 days. The estimated figure indicates a 0.4% increase from the year-ago EPS of $2.35. Also, the consensus mark for revenues is $3.59 billion, suggesting 0.3% year-over-year growth.
Factors to Note
Challenging affordability conditions due to higher rates are likely to have impacted the company’s first-quarter revenues compared with the year-ago period. Higher mortgage rates are likely to have an impact on the company’s performance in 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 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 6,200-6,600 units compared with 6,394 homes delivered a year ago. Our model predicts deliveries to grow 1.3% year over year to 6,474 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 $545,000. Our model predicts the ASP of homes delivered to inch down 0.9% year over year to $540,400.
We expect the Homebuilding revenues to grow 0.3% to $3.53 billion from $3.52 billion a year ago due to tepid deliveries and lower 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 28%-28.5% for the quarter compared with 29% reported in the year-ago period. Our model predicts homebuilding gross margins to be 28.2% for the quarter, down 80 basis points from the year-ago period.
The company anticipates SG&A (as a percentage of home sales revenues) to be in the range of 10%, higher than 9.6% reported in the prior-year quarter.
Meanwhile, we expect the company’s new orders to increase 0.3% year over year to 7,378 units in the quarter.
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 0.00%. 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 in their respective quarters to be reported.
BCC’s earnings for the to-be-reported quarter are expected to decline 7.8%. The company reported better-than-expected earnings in three of the last four quarters but missed on one occasion, the average surprise being 20.4%.
Martin Marietta Materials, Inc. (MLM - Free Report) has an Earnings ESP of +0.28% and carries a Zacks Rank #3.
MLM’s earnings topped the consensus mark in all the last four quarters, with the average being 41.5%. Earnings for the to-be-reported quarter are expected to decline 15.7% year over year.
United Rentals, Inc. (URI - Free Report) has an Earnings ESP of +2.32% and carries a Zacks Rank #2.
URI’s earnings topped the consensus mark in three of the last four quarters and missed on one occasion, with the average being 3.1%. Earnings for the to-be-reported quarter are expected to grow 5.5% year over year.
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Factors Setting the Tone for PulteGroup's (PHM) Q1 Earnings
PulteGroup Inc. (PHM - Free Report) is scheduled to report first-quarter 2024 results on Apr 23, before the opening bell.
In the last reported quarter, the company’s earnings per share (EPS) beat the Zacks Consensus Estimate by 2.5% but revenues missed the same by 4.2%. However, adjusted EPS and revenues decreased 14.8% and 15.5% on a year-over-year basis, respectively.
PulteGroup’s earnings topped the consensus mark in all the trailing four quarters, the average surprise being 15.1%.
Trend in Estimate Revision
The Zacks Consensus Estimate for the to-be-reported quarter’s EPS has increased to $2.36 from $2.35 over the past 60 days. The estimated figure indicates a 0.4% increase from the year-ago EPS of $2.35. Also, the consensus mark for revenues is $3.59 billion, suggesting 0.3% year-over-year growth.
Factors to Note
Challenging affordability conditions due to higher rates are likely to have impacted the company’s first-quarter revenues compared with the year-ago period. Higher mortgage rates are likely to have an impact on the company’s performance in 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 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 6,200-6,600 units compared with 6,394 homes delivered a year ago. Our model predicts deliveries to grow 1.3% year over year to 6,474 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 $545,000. Our model predicts the ASP of homes delivered to inch down 0.9% year over year to $540,400.
We expect the Homebuilding revenues to grow 0.3% to $3.53 billion from $3.52 billion a year ago due to tepid deliveries and lower 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 28%-28.5% for the quarter compared with 29% reported in the year-ago period. Our model predicts homebuilding gross margins to be 28.2% for the quarter, down 80 basis points from the year-ago period.
The company anticipates SG&A (as a percentage of home sales revenues) to be in the range of 10%, higher than 9.6% reported in the prior-year quarter.
Meanwhile, we expect the company’s new orders to increase 0.3% year over year to 7,378 units in the quarter.
PulteGroup, Inc. Price and EPS Surprise
PulteGroup, Inc. price-eps-surprise | PulteGroup, Inc. Quote
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 0.00%. 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 in their respective quarters to be reported.
Boise Cascade Company (BCC - Free Report) has an Earnings ESP of +1.94% and carries a Zacks Rank of 3. 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 7.8%. The company reported better-than-expected earnings in three of the last four quarters but missed on one occasion, the average surprise being 20.4%.
Martin Marietta Materials, Inc. (MLM - Free Report) has an Earnings ESP of +0.28% and carries a Zacks Rank #3.
MLM’s earnings topped the consensus mark in all the last four quarters, with the average being 41.5%. Earnings for the to-be-reported quarter are expected to decline 15.7% year over year.
United Rentals, Inc. (URI - Free Report) has an Earnings ESP of +2.32% and carries a Zacks Rank #2.
URI’s earnings topped the consensus mark in three of the last four quarters and missed on one occasion, with the average being 3.1%. Earnings for the to-be-reported quarter are expected to grow 5.5% year over year.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.