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PulteGroup (PHM) Q4 Earnings & Revenues Beat, Shares Up

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PulteGroup Inc.’s (PHM - Free Report) shares gained 1.9% after the company reported fourth-quarter 2019 results, wherein earnings and revenues surpassed the respective Zacks Consensus Estimate. Higher demand owing to favorable housing dynamics, backed by lower interest rates and improved affordability, had a positive impact on PulteGroup’s performance in the quarter.

Inside the Headlines

Earnings per share came in at $1.14, beating the consensus mark of $1.08 by 5.6%. The bottom line also grew 2.7% year over year.

Total revenues of $3.02 billion outpaced the consensus mark of $2.97 billion by 1.5% and increased 0.6% from the year-ago figure of $2.99 billion.

PulteGroup, Inc. Price, Consensus and EPS Surprise

PulteGroup, Inc. Price, Consensus and EPS Surprise

PulteGroup, Inc. price-consensus-eps-surprise-chart | PulteGroup, Inc. Quote

Segment Discussion

PulteGroup primarily operates through two business segments — Homebuilding and Financial Services.

Revenues from the Homebuilding segment were up 0.1% year over year to $2.95 billion.

Moreover, home sale revenues of $2.93 billion improved 1.4% year over year, given higher deliveries. However, land sale revenues dropped 63.3% to $21.8 million from $59.5 million a year ago.

The number of homes closed increased 2% year over year to 6,822. Home closings grew across most of the operating regions served (barring Florida, Southeast and Northeast). Average selling price (ASP) of homes delivered was $429,000, down 1% year over year.

Importantly, the company’s backlog — which represents orders yet to be closed — was 10,507, up 20.5% year over year. In addition, potential housing revenues from backlog increased 18.2% from the prior-year quarter to $4.54 billion.

Moreover, new home orders increased 33% year over year to 5,691 units in the quarter. Home orders were up across all operating regions served, given increased community count and higher absorption pace. Value of new orders also grew 35% from a year ago to $2.5 billion.

Margins

Home sales gross margin was up 130 basis points (bps) year over year to 22.8% in the quarter. On an adjusted basis, the metric was down 100 bps year over year. Furthermore, adjusted operating margin contracted 90 bps to 12.8%.

Adjusted homebuilding SG&A expenses — as a percentage of home sale revenues — were 10%, down 10 bps from the prior-year quarter.

Revenues from the Financial Services segment improved 26.8% year over year to $69.8 million. The segment generated pre-tax income of $34 million, up 580% from a year ago. Mortgage capture rate in the quarter was 84%, reflecting an increase from 77% in the year-ago period.

2019 Highlights

The company reported full-year EPS of $3.66, reflecting a 3.1% year-over-year increase. Revenues came in at $10.21 billion, up 0.2% year over year.

Financials

As of Dec 31, 2019, cash and cash equivalents were $1.22 billion, up from $1.11 billion at the end of 2018. At 2019-end, its debt-to-capitalization was 33.6%, down from 38.6% at 2018-end.

In the reported quarter, PulteGroup repurchased 0.8 million shares for $30 million. In 2019, it repurchased 8.4 million common shares, or 3% of outstanding shares, for $274 million.

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

Recent Peer Releases

D.R. Horton, Inc.’s DHI first-quarter fiscal 2020 adjusted earnings came in at 99 cents per share, surpassing the Zacks Consensus Estimate of 92 cents by 7.6%. The reported figure also increased from the year-ago profit of 76 cents per share. Total revenues (Homebuilding, Forestar and Financial Services) came in at $4.02 billion, up 14.3% year over year. The reported figure also topped the consensus mark of $3.78 billion.

KB Home KBH ended fiscal 2019 on an impressive note, with fourth-quarter fiscal 2019 earnings beating analysts’ expectation. Quarterly earnings of $1.31 per share outpaced the Zacks Consensus Estimate of 1.29 cents by 1.6% and increased 36% from a year ago. However, total revenues of $1,558.7 million missed the consensus mark of $1,599 million by 2.9%. That said, the top line grew by a notable 15.6% year over year, mainly due to higher home deliveries, partly offset by lower ASP of homes delivered.

Lennar Corporation LEN reported fourth-quarter fiscal 2019 (ended Nov 30, 2019) earnings of $2.13 per share, surpassing the Zacks Consensus Estimate of $1.90 by 12.1%. Also, the reported figure jumped 15.8% from $1.84 in the year-ago quarter (excluding one-time gain of 58 cents per share from the sale of Rialto and non-recurring expenses). Revenues of $6.97 billion topped the consensus estimate of $6.7 billion by 4.9%. The reported figure also increased 7.9% year over year.

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