PulteGroup Gears Up to Report Q1 Earnings: Things to Keep in Mind

PulteGroup Inc. PHM is scheduled to report first-quarter 2025 results on April 22, before the opening bell.In the last reported quarter, the company’s earnings per share (EPS) and revenues beat the Zacks Consensus Estimate by 8% and 5.6%, respectively. On a year-over-year basis, both metrics increased 6.7% and 14.7%, respectively.PulteGroup’s earnings topped the consensus mark in each of the trailing four quarters, the average surprise being 12.3%. (Find the latest earnings estimates and surprises on Zacks Earnings Calendar.)Trend in PHM’s Estimate RevisionThe Zacks Consensus Estimate for the to-be-reported quarter’s EPS has decreased to $2.47 from $2.48 in the past seven days. The estimated figure indicates a 13.9% decrease from the year-ago EPS of $2.87.PulteGroup, Inc. Price and EPS Surprise PulteGroup, Inc. price-eps-surprise | PulteGroup, Inc. QuoteThe consensus mark for revenues is pegged at $3.86 billion, implying a 2.2% year-over-year decline.Factors Likely to Shape PulteGroup’s Q1 EarningsRevenuesPulteGroup's first-quarter top line is likely to have decreased year over year, primarily due to the ongoing affordability challenges in the housing market. The company is likely to have faced pressure from high mortgage rates, which continue to impact homebuyers. Additionally, the Fed's pause on further rate cuts, alongside recently imposed tariffs, is likely to have contributed to an inflationary environment affecting demand.PulteGroup expects home closings to be approximately 6,400-6,800 units, down from 7,095 units a year ago. Our model predicts home closings to decline 4.8% year over year to 6,754 units.Although the company’s balanced operating model, mortgage rate buydown program and favorable home pricing are likely to have supported its underlying prospects, the current uncertainties surrounding the housing market are expected to have overshadowed the top-line performance.Segment-wise, for first-quarter 2025, our model predicts overall Homebuilding revenues (which contributed 97.6% to total revenues in 2024) to decrease 0.8% year over year to $3.83 billion, due to lower home closings. Our model expects financial services revenues (which contributed 2.4% to total revenues in 2024) to increase 2.4% year over year to $94.6 million.Nonetheless, PulteGroup’s focus on entry-level homes, a prudent land investment strategy and affordable product offerings is likely to have somewhat aided the top line. PHM's pricing strategy focuses on balancing affordability challenges faced by homebuyers and shifting market dynamics. The company expects a higher average selling price (ASP) for the quarter between $560,000 and $570,000 compared with the year-ago level of $538,000. Our model predicts the ASP of homes closed to increase 4.1% year over year to $560,200.MarginsPulteGroup is likely to have faced significant margin pressure in the first quarter, due to the need for incentives to manage affordability concerns while maintaining profitability. The company's bottom line is expected to have decreased year over year in the quarter, due to higher incentive costs stemming from competitive market dynamics. That said, prudent cost-saving efforts might have partly mitigated the risks.The company expects home sales gross margins to be approximately 27% for the quarter, down from 29.6% reported in the year-ago period. Our model predicts homebuilding gross margins to be 26.7% for the quarter, down 260 basis points from the year-ago period.Orders & BacklogsOur model expects the company’s net new orders to increase 4.4% year over year to 8,752 units in the quarter. We expect the total backlog to decline 9.5% to 12,151 units and the total backlog value to decrease 6% year over year to $7.71 billion.What the Zacks Model Unveils for PHMOur proven model predicts an earnings beat for PulteGroup for the quarter to be reported. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is exactly the case here.Earnings ESP of PHM: PulteGroup has an Earnings ESP of +0.27%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.PHM’s Zacks Rank: The company currently carries a Zacks Rank #3.Other Stocks With Favorable CombinationHere are some other stocks from the Zacks Construction sector that investors may consider, as our model shows that these, too, have the right combination of elements to deliver an earnings beat this time around.MasTec, Inc. MTZ has an Earnings ESP of +0.85% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.MTZ’s earnings beat estimates in each of the last four quarters, the average surprise being 31.6%. The company’s earnings for the quarter to be reported are expected to increase 361.5%.Meritage Homes Corporation MTH currently has an Earnings ESP of +0.62% and a Zacks Rank of 3.MTH’s earnings beat estimates in each of the last four quarters, the average surprise being 46.1%. The company’s earnings for the quarter to be reported are expected to decrease 32.4%.Martin Marietta Materials, Inc. MLM currently has an Earnings ESP of +4.48% and a Zacks Rank of 3.MLM’s earnings beat estimates in two of the last four quarters and missed twice, the average negative surprise being 1.7%. The company’s earnings for the quarter to be reported are expected to decrease 4.7%.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is among the most innovative financial firms. With a fast-growing customer base (already 50+ million) and a diverse set of cutting edge solutions, this stock is poised for big gains. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report PulteGroup, Inc. (PHM): Free Stock Analysis Report Meritage Homes Corporation (MTH): Free Stock Analysis Report Martin Marietta Materials, Inc. (MLM): Free Stock Analysis Report MasTec, Inc. (MTZ): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks