We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
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.
Why Is PulteGroup (PHM) Down 3.8% Since Last Earnings Report?
Read MoreHide Full Article
A month has gone by since the last earnings report for PulteGroup (PHM - Free Report) . Shares have lost about 3.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is PulteGroup due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
PulteGroup Inc. reported impressive results in the third quarter of 2024, wherein earnings and total revenues handily beat the Zacks Consensus Estimate and grew year over year.
The quarter’s result reflects the successful execution of the company’s balanced spec and build-to-order operating model. This, alongside the structural shortage of homes from years of underbuilding, continued to favor the company. Thanks to such tailwinds, the home closings during the quarter grew year over year resulting in record third-quarter home sale revenues.
Furthermore, PHM invested about $1.4 billion into its business during the quarter, while returning more than $360 million to its shareholders and generating a return on equity of 27% over the past 12 months.
The Fed’s turn on lowering interest rates in the latter half of September has sparked momentum in the homebuilding industry as this tool is expected to address the affordability challenges faced by homebuyers. PulteGroup is optimistic about the upcoming market trends and expects to deliver strong earnings in 2024.
Inside PHM’s Headlines
PHM reported earnings of $3.35 per share, which topped the Zacks Consensus Estimate of $3.10 by 8.1% and increased 16% from $2.90 reported a year ago.
Total revenues of $4.48 billion also surpassed the consensus mark of $4.26 billion by 5.1% and increased 12% from the year-ago figure of $4 billion.
Segmental Discussion of PulteGroup
PulteGroup primarily operates through two business segments — Homebuilding and Financial Services.
Homebuilding: Revenues from this segment were up 12% year over year to $4.3 billion. The increase in home sale revenues was primarily driven by growth in the number of homes closed. Land sale and other revenues declined to $19.3 million from $39.9 million a year ago.
The number of homes closed increased 12% to 7,924 units from the year-ago level. The average selling price of homes delivered was $548,000, almost flat year over year.
Net new home orders marginally declined 0.5% year over year to 7,031 units. Yet, the value of new orders rose 2.9% from a year ago to $3.93 billion. PHM’s backlog, which represents orders yet to be closed, was 12,089 units, down 10.8% year over year. In addition, potential housing revenues from the backlog were down year over year to $7.69 billion from $8.13 billion.
Home sales gross margin was down 70 basis points (bps) year over year to 28.8%. SG&A expenses (as a percentage of home sales revenues) increased 30 bps to 9.4% from 9.1% a year ago.
Financial Services: Revenues from this segment increased 48.4% year over year to $113.8 million. Pretax income for the segment increased 90% to $55 million from the year-ago figure of $29 million. The increase in pre-tax income reflects the benefit of higher volumes in PulteGroup’s homebuilding operations paired with a favorable operating environment.
PHM’s Financials
At the end of the third quarter, PulteGroup’s cash, cash equivalents and restricted cash were $1.46 billion, down from $1.85 billion at the end of 2023. Net debt-to-capital was 1.4% at the third-quarter end, up from 1.1% at 2023-end.
Net cash provided by operating activities was $1.11 billion in the first nine months of 2024 compared with $1.91 billion in the prior-year period. In the reported quarter, the company repurchased 2.5 million common shares for $320 million at an average price of $126.05 per share.
Guidance
For fourth-quarter 2024, the company expects closing 7,900-8,300 homes, depicting a growth from 7,615 homes closed in the year-ago period. The company expects the ASP of the closed units to be $555,000-$565,000, compared with an ASP of $547,000 reported a year ago. The gross margin in fourth quarter is expected to be in 27.5-27.8% range, down from 28.9% year over year.
PHM expect tax rate between 24% and 24.5% in fourth quarter, excluding the impact of any potential incremental energy tax credit purchases. It also projects nearly 950 average community count for fourth quarter, which represent an increase of 3% over last year.
For 2024, the company expects closing nearly 31,000 homes. Gross margin is expected to be nearly 29%, SG&A expenses within 9.2-9.5% of home sales.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -5.3% due to these changes.
VGM Scores
At this time, PulteGroup has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, PulteGroup has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Why Is PulteGroup (PHM) Down 3.8% Since Last Earnings Report?
A month has gone by since the last earnings report for PulteGroup (PHM - Free Report) . Shares have lost about 3.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is PulteGroup due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
PulteGroup's Q3 Earnings & Revenues Beat Estimates
PulteGroup Inc. reported impressive results in the third quarter of 2024, wherein earnings and total revenues handily beat the Zacks Consensus Estimate and grew year over year.
The quarter’s result reflects the successful execution of the company’s balanced spec and build-to-order operating model. This, alongside the structural shortage of homes from years of underbuilding, continued to favor the company. Thanks to such tailwinds, the home closings during the quarter grew year over year resulting in record third-quarter home sale revenues.
Furthermore, PHM invested about $1.4 billion into its business during the quarter, while returning more than $360 million to its shareholders and generating a return on equity of 27% over the past 12 months.
The Fed’s turn on lowering interest rates in the latter half of September has sparked momentum in the homebuilding industry as this tool is expected to address the affordability challenges faced by homebuyers. PulteGroup is optimistic about the upcoming market trends and expects to deliver strong earnings in 2024.
Inside PHM’s Headlines
PHM reported earnings of $3.35 per share, which topped the Zacks Consensus Estimate of $3.10 by 8.1% and increased 16% from $2.90 reported a year ago.
Total revenues of $4.48 billion also surpassed the consensus mark of $4.26 billion by 5.1% and increased 12% from the year-ago figure of $4 billion.
Segmental Discussion of PulteGroup
PulteGroup primarily operates through two business segments — Homebuilding and Financial Services.
Homebuilding: Revenues from this segment were up 12% year over year to $4.3 billion. The increase in home sale revenues was primarily driven by growth in the number of homes closed. Land sale and other revenues declined to $19.3 million from $39.9 million a year ago.
The number of homes closed increased 12% to 7,924 units from the year-ago level. The average selling price of homes delivered was $548,000, almost flat year over year.
Net new home orders marginally declined 0.5% year over year to 7,031 units. Yet, the value of new orders rose 2.9% from a year ago to $3.93 billion. PHM’s backlog, which represents orders yet to be closed, was 12,089 units, down 10.8% year over year. In addition, potential housing revenues from the backlog were down year over year to $7.69 billion from $8.13 billion.
Home sales gross margin was down 70 basis points (bps) year over year to 28.8%. SG&A expenses (as a percentage of home sales revenues) increased 30 bps to 9.4% from 9.1% a year ago.
Financial Services: Revenues from this segment increased 48.4% year over year to $113.8 million. Pretax income for the segment increased 90% to $55 million from the year-ago figure of $29 million. The increase in pre-tax income reflects the benefit of higher volumes in PulteGroup’s homebuilding operations paired with a favorable operating environment.
PHM’s Financials
At the end of the third quarter, PulteGroup’s cash, cash equivalents and restricted cash were $1.46 billion, down from $1.85 billion at the end of 2023. Net debt-to-capital was 1.4% at the third-quarter end, up from 1.1% at 2023-end.
Net cash provided by operating activities was $1.11 billion in the first nine months of 2024 compared with $1.91 billion in the prior-year period. In the reported quarter, the company repurchased 2.5 million common shares for $320 million at an average price of $126.05 per share.
Guidance
For fourth-quarter 2024, the company expects closing 7,900-8,300 homes, depicting a growth from 7,615 homes closed in the year-ago period. The company expects the ASP of the closed units to be $555,000-$565,000, compared with an ASP of $547,000 reported a year ago. The gross margin in fourth quarter is expected to be in 27.5-27.8% range, down from 28.9% year over year.
PHM expect tax rate between 24% and 24.5% in fourth quarter, excluding the impact of any potential incremental energy tax credit purchases. It also projects nearly 950 average community count for fourth quarter, which represent an increase of 3% over last year.
For 2024, the company expects closing nearly 31,000 homes. Gross margin is expected to be nearly 29%, SG&A expenses within 9.2-9.5% of home sales.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -5.3% due to these changes.
VGM Scores
At this time, PulteGroup has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, PulteGroup has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.