Back to top

Image: Bigstock

What's in Store for PulteGroup (PHM) This Earnings Season?

Read MoreHide Full Article

PulteGroup Inc. (PHM - Free Report) is scheduled to report second-quarter 2018 results on Jul 26, before the market opens.

In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate by 34.1%. It surpassed estimates in all the last four quarters with an average earnings beat of 10.5%.

Let us take a look at the factors that are likely to influence the company’s second-quarter 2018 results.

Healthy Housing Momentum to Boost Revenues

Healthy buyer demand toward strong second-quarter revenues for the company. Homebuilders have been faring well lately, courtesy of steady job and wage growth, recovering economy,  rising rentals, rapidly increasing household formation as well as a limited supply of inventory.

Moreover, PulteGroup’s annual land-acquisition strategies resulted in improved volumes, revenues and profitability. The company’s land strategy emphasizes on investing in shorter-lived and smaller land assets, which will mitigate market risks.

Homebuilding revenues increased 21.1% in the first quarter of 2018, comprising Home sale and Land sale revenues, which increased 20.6% and more than 300%, respectively. Given the strong demand, the trend is likely to be reflected in the upcoming quarterly results as well.

The Zacks Consensus Estimate of $2.3 billion for Homebuilding revenues reflects growth of 17.8% from the year-ago quarter. Home sale revenues reflect growth of 21.1% year over year, per the Zacks Consensus Estimate. Land sale revenues are likely increase $4.6 million from the prior-year quarter’s tally. Meanwhile, the consensus estimate for Financial Services revenues of $56 million reflects year-over-year increase of 18.4%. Also, the company expects deliveries in the second quarter in the range of 5,400-5,700 homes, showing an increase of 7-13% year over year.

Overall, for the second quarter, the Zacks Consensus Estimate for total revenues is pegged at $2.4 billion, implying 17.4% growth.

Cost-Saving Initiatives to Boost Earnings

Apart from prudent capital allocation, PulteGroup is taking actions to improve the operating and financial performance. These initiatives include improving overhead leverage, increasing inventory turns and implementing new pricing strategies, which are expected to boost profits in the upcoming results.

Overall, considering the higher revenue expectation as well as prudent cost saving initiatives, the bottom line is expected to increase significantly. The Zacks Consensus Estimate for earnings is pegged at 74 cents, reflecting a 57.5% increase from the prior-year quarter.

What Does the Zacks Model Unveil?

Our proven model does not show that PulteGroup is likely to beat earnings estimates this quarter. A stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen.

PulteGroup has an Earnings ESP of -0.17% and a Zacks Rank #3, which does not make us confident of an earnings beat. You may uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

PulteGroup, Inc. Price and EPS Surprise

 

Stocks Worth a Look

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.

Lennox International, Inc (LII - Free Report) has an Earnings ESP of +1.41% and a Zacks Rank #2. The company is slated to report quarterly numbers on Jul 23, 2018.

KBR, Inc (KBR - Free Report) has an Earnings ESP of +2.29% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The company is expected to report quarterly results on Aug 1, 2018.

RPM International Inc (RPM - Free Report) has an Earnings ESP of +1.64% and carries a Zacks Rank #3. The company is slated to report quarterly numbers on Jul 19, 2018.

Today's Stocks from Zacks' Hottest Strategies

It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.

And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.

See Them Free>>

Published in