Back to top

PulteGroup (PHM) Q3 Earnings Meet Estimates, Sales Miss

Read MoreHide Full Article

PulteGroup Inc.’s (PHM - Free Report) third-quarter 2016 adjusted earnings of 43 cents per share were in line with the Zacks Consensus Estimate. However, quarterly earnings increased 30.3% from the year-ago quarter adjusted figure of 33 cents on the back of higher home sales and lower share count.

Earnings in the quarter under review were adjusted for 6 cents per share related with the settlement of a disputed land transaction, restructuring costs associated with previously announced plans to cut overhead expenses, and costs relating to shareholder activities. Again, earnings in the third quarter of 2015 were adjusted for 3 cents owing to litigation-related reserve adjustments.  
 
PulteGroup’s total revenue of $1.94 billion missed the Zacks Consensus Estimate of $1.95 billion by 0.5%. Revenues were however up 28.9% year over year on an increase in the number of homes delivered.

Segment Details

The company conducts operations through two primary business segments – Homebuilding and Financial Services.

Homebuilding revenues rose 29.1% year over year to $1.89 billion. The company stated that overall housing demand remained positive on the back of lower interest rates and a general improvement in the economic environment. The company also believes that demand will continue to increase in the days ahead.

Home sale revenues of $1.88 billion increased 28.5% year over year on double-digit increase in both home closings and average selling price. Land sale revenues of $13.2 million increased significantly from $3.6 million a year ago.

The number of homes closed increased 15.6% year over year to 5,037. Home closings increased in all operating regions of the company – Southeast, Florida, Midwest, Texas and West – barring Northeast.

Average selling prices (ASP) of homes delivered was $374,000, up 11.3% year over year.

The company’s backlog, which represents orders yet to be closed, was 9,417, up 7.8% year over year. Potential housing revenues from backlog increased 19.7% to $3.7 billion.  Backlog value was driven by a 10.6% increase in average sales price of backlogs..  

New home orders increased 16.7% year over year to 4,775 in the quarter. Home orders increased in all operating regions, except Northeast. Value of new orders increased 25% year over year to $1.83 billion.

Revenues from the Financial Services segment increased 23.2% year over year to $48 million. The segment generated pre-tax income of $21.3 million, higher than $14.4 million in the prior-year quarter, driven by higher closing volumes in homebuilding operations and a favorable interest rate environment.

Margins Soft

In line with management’s guidance, home sales gross margin decreased 250 basis points (bps) year over year to 21.1%.

Financials

As of Sep 30, 2016, cash and cash equivalents were $434.2 million, down from $754.2 million at 2015-end.

Guidance

PulteGroup’s management is positive about the housing industry and believes that demand will increase at a slow and steady pace over the next several years, supported by improving economic conditions, job creation and low interest rates. The company expects its previous land investment to position it well for consistent earnings growth.  

PulteGroup carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Peer Releases

KB Home (KBH - Free Report) reported impressive third-quarter fiscal 2016 adjusted earnings of 42 cents per share that surpassed the Zacks Consensus Estimate of 39 cents by 7.7%.

Lennar Corporation (LEN - Free Report) performed impressively and beat expectations on both counts for the third time in a row in fiscal 2016. Lennar’s third-quarter fiscal 2016 adjusted earnings of $1.01 per share surpassed the Zacks Consensus Estimate of 88 cents by 14.8%.

Upcoming Release

DR Horton Inc. (DHI - Free Report) will release its fourth-quarter fiscal 2016 earnings on Nov 8.
 

PULTE GROUP ONC Price, Consensus and EPS Surprise

 

PULTE GROUP ONC Price, Consensus and EPS Surprise | PULTE GROUP ONC Quote

Confidential from Zacks

Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>




In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


PulteGroup, Inc. (PHM) - free report >>

Lennar Corporation (LEN) - free report >>

KB Home (KBH) - free report >>

D.R. Horton, Inc. (DHI) - free report >>


More from Zacks Analyst Blog

You May Like