PulteGroup to Report Q4 Earnings: What's in Store for the Stock?

PulteGroup Inc. PHM is scheduled to report fourth-quarter 2024 results on Jan. 30, before the opening bell.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.In the last reported quarter, the company’s earnings per share (EPS) and revenues beat the Zacks Consensus Estimate by 8.1% and 5.1%, respectively. On a year-over-year basis, both metrics increased 16% and 12%, respectively.PulteGroup’s earnings topped the consensus mark in each of the trailing four quarters, the average surprise being 10.9%.Trend in PHM’s Estimate RevisionThe Zacks Consensus Estimate for the to-be-reported quarter’s EPS has increased to $3.21 from $3.20 in the past 30 days. The estimated figure indicates a 2.1% decrease from the year-ago EPS of $3.28.PulteGroup, Inc. Price and EPS Surprise PulteGroup, Inc. price-eps-surprise | PulteGroup, Inc. QuoteThe consensus mark for revenues is pegged at $4.66 billion, implying 8.6% year-over-year growth.Factors Likely to Shape PulteGroup’s Q4 EarningsRevenuesPulteGroup's fourth-quarter top line is likely to have increased year over year, driven by a balanced operating model, mortgage rate buydown program and favorable home pricing. Despite higher mortgage rates and challenging affordability conditions, the company is expected to have maintained demand, with rate buy-downs serving as a key incentive to help its consumers bridge the affordability gap. Moreover, PulteGroup’s focus on entry-level homes, a prudent land investment strategy and affordable product offerings are likely to have aided the top line.PulteGroup expects home closings to be approximately 7,900-8,300 units, up from 7,615 units a year ago. Our model predicts home closings to grow 5.2% year over year to 8,012 units.PHM's pricing strategy focuses on balancing affordability challenges faced by homebuyers and shifting market dynamics. This approach is expected to have supported demand during the fourth quarter while ensuring the company maintained an attractive offering for its consumers. PHM expects a higher average selling price (“ASP”) for the quarter between $555,000 and $565,000 compared with the year-ago level of $547,000. Our model predicts the ASP of homes closed to increase 2.3% year over year to $559,500.Segment-wise, for fourth-quarter 2024, our model predicts overall Homebuilding revenues (which contributed 98% to total revenues in 2023) to have increased 7.5% year over year to $4.51 billion, thanks to higher home closings and ASP. Our model expects financial services revenues (which contributed 2% to total revenues in 2023) to increase 4.4% year over year to $98 million.MarginsPulteGroup is likely to have faced significant margin pressure in the fourth 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 homebuilding gross margins to be in the range of 27.5-27.8% for the quarter, down from 28.7% reported in the year-ago period. Our model predicts homebuilding gross margins to be 27.6% for the quarter, down 110 basis points from the year-ago period.Orders & BacklogsOur model expects the company’s net new orders to increase 6% year over year to 6,586 units in the quarter. We expect the total backlog to decline 12.2% to 10,663 units and the total backlog value to decrease 5.6% year over year to $6.91 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 +2.36%. 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.Weyerhaeuser Company WY has an Earnings ESP of +1.01% and a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.WY reported better-than-expected earnings in three of the last four quarters and missed on one occasion, the average surprise being 41.6%. The company’s earnings for the fourth quarter of 2024 are expected to decrease 56.3%.Sterling Infrastructure, Inc. STRL currently has an Earnings ESP of +2.99% and a Zacks Rank of 3.STRL’s earnings for the fourth quarter of 2024 are expected to increase 3.1%. The company reported better-than-expected earnings in each of the trailing four quarters, the average surprise being 21.5%.Trex Company, Inc. TREX currently has an Earnings ESP of +10.53% and a Zacks Rank of 1.TREX’s earnings for the fourth quarter of 2024 are expected to decrease 75%. The company reported better-than-expected earnings in each of the last four quarters, the average surprise being 9%.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want 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 Weyerhaeuser Company (WY): Free Stock Analysis Report PulteGroup, Inc. (PHM): Free Stock Analysis Report Sterling Infrastructure, Inc. (STRL): Free Stock Analysis Report Trex Company, Inc. (TREX): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks