Why Is PulteGroup (PHM) Up 6.1% Since Last Earnings Report?

A month has gone by since the last earnings report for PulteGroup (PHM). Shares have added about 6.1% in that time frame, outperforming the S&P 500.But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is PulteGroup due for a pullback? Well, first let's take a quick look at its latest earnings report in order to get a better handle on the recent catalysts for PulteGroup, Inc. before we dive into how investors and analysts have reacted as of late.PulteGroup's Q2 Earnings and Revenue Beat EstimatesPulteGroup has reported better-than-expected second-quarter 2024 results, wherein adjusted earnings and total revenues handily beat the Zacks Consensus Estimate.CEO Ryan Marshall noted that while the spring selling season was impacted by high mortgage rates, affordability challenges, and economic uncertainty, consumer sentiment improved during periods of rate declines. The company is adjusting home production and land investments to current market conditions while preparing to capitalize on future demand growth.Inside PulteGroup’s HeadlinesThe company reported adjusted earnings of $3.03 per share, which topped the Zacks Consensus Estimate of $2.92 by 3.8%. In the year-ago quarter, PulteGroup reported adjusted earnings per share of $3.58.Total revenues of $4.4 billion also surpassed the consensus mark of $4.37 billion by 0.8% but decreased 4.3% from the year-ago figure of $4.6 billion.Segmental Discussion of PulteGroupPulteGroup primarily operates through two business segments — Homebuilding and Financial Services.Homebuilding: Revenues from this segment were down 4.1% year over year to $4.3 billion. We had expected Homebuilding revenues to decrease 4.3% year over year to $4.29 billion. Home sale revenues decreased 4.1% year over year to $4.27 billion. Land sale and other revenues decreased 13.1% to $34.6 million from a year ago.The number of homes closed dropped 5.7% to 7639 units (versus our projection of 7,561 units) from the year-ago level. The ASP of homes delivered was $559,000, up 1.8% year over year. We had predicted ASP of homes delivered to be $562,200.Net new home orders declined 7.4% year over year to 7,083 units (versus our expectation of 7,811 units). Yet, the value of new orders declined 10.8% from a year ago to $3.89 billion.PHM’s backlog, which represents orders yet to be closed, was 10,779 units, down from 12,982 units a year ago. In addition, potential housing revenues from the backlog were down year over year to $6.84 billion from $8.11 billion.Home sales gross margin was down 290 basis points (bps) year over year to 27%. SG&A expenses (as a percentage of home sales revenues) expanded 100 bps to 9.1% from a year ago.Financial Services: Revenues from this segment dropped 9.4% year over year to $101.2 million. Pretax income for the segment declined to $43 million from $63 million a year ago, due to lower closing volumes in the company’s homebuilding operations.Sneak Peek at PulteGroup’s FinancialsAt the end of the second quarter, PulteGroup’s cash, cash equivalents and restricted cash were $1.27 billion, down from $1.65 billion at the end of 2024. Net debt-to-capital was 2.8% at the second-quarter end against (0.3)% in 2024-end.Net cash provided by operating activities was $421.7 million in the second quarter, down from $657.3 million in the prior-year period.In the quarter, the company repurchased 3 million common shares for $300 million at an average price of $100.54 per share.How Have Estimates Been Moving Since Then?It turns out, fresh estimates have trended downward during the past month.VGM ScoresCurrently, PulteGroup has a subpar Growth Score of D, a grade with the same score on the momentum front. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for value investors.Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise PulteGroup has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.Free Report: 3 Software Stocks Poised to SkyrocketSoftware stocks are poised to catapult higher in the coming months (and years) thanks to several factors, especially the explosive growth of AI. Zacks' urgent report reveals 3 top software stocks to own right now.Access the report free today >>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 PulteGroup, Inc. (PHM): 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