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Pultegroup (PHM)
NYSE:PHM
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PulteGroup
(NYSE:PHM)74Outperform
Positive Factors
Financial Performance
PulteGroup reported 4Q earnings ahead of forecast, indicating strong financial performance.
Strategic Positioning
PulteGroup is well-positioned amidst elevated interest rates through a strong move-up strategy.
Negative Factors
Market Challenges
First-time buyer orders declined by 14% and active adult declined by 1%, reflecting challenges in the market.
PulteGroup (PHM) vs. S&P 500 (SPY)
Market Cap
$20.83B
Dividend Yield0.8%
Average Volume (3M)2.37M
Price to Earnings (P/E)7.0
Beta (1Y)1.36
Revenue Growth11.74%
EPS Growth25.66%
CountryUS
Employees6,793
SectorConsumer Cyclical
Sector Strength53
IndustryResidential Construction
Share Statistics
EPS (TTM)14.71
Shares Outstanding202,457,950
10 Day Avg. Volume2,314,681
30 Day Avg. Volume2,374,112
Financial Highlights & Ratios
PEG Ratio0.27
Price to Book (P/B)N/A
Price to Sales (P/S)1.15
Price to Cash Flow (P/CF)9.10
P/FCF Ratio9.10
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$134.38Price Target Upside30.59% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering13
PulteGroup Business Overview & Revenue Model
Company DescriptionPulteGroup, Inc. (PHM) is one of the largest homebuilding companies in the United States, operating in the residential construction sector. The company is known for its diverse portfolio of brands, including Pulte Homes, Centex, Del Webb, DiVosta, and John Wieland Homes and Neighborhoods. PulteGroup focuses on building and selling houses across various price points and demographics, including first-time, move-up, and active adult homebuyers, thereby catering to a wide range of consumer needs and preferences.
How the Company Makes MoneyPulteGroup makes money primarily through the construction and sale of residential homes. The company's revenue model is centered around developing land, designing, and building homes, and ultimately selling these properties to consumers. PulteGroup's key revenue streams include homebuilding operations, which involve the sale of single-family detached homes, townhouses, and condominiums. Additionally, the company may earn revenue from mortgage banking operations through its subsidiary, Pulte Mortgage, which provides mortgage and financial services to homebuyers. Significant factors contributing to PulteGroup's earnings include market demand for new homes, land acquisition strategies, and efficient management of construction costs. The company's earnings are also influenced by economic conditions, interest rates, and government policies affecting the housing market.
PulteGroup Financial Statement Overview
Summary
PulteGroup exhibits strong financial health with robust profitability and efficient leverage management. The income statement shows improving profit margins, while the balance sheet highlights financial stability through a strong equity position and reduced debt reliance. Cash flow is healthy, despite some volatility in free cash flow growth. Overall, PulteGroup is well-positioned in its industry, though cash flow growth fluctuations pose potential risks.Income Statement
PulteGroup's income statement demonstrates strong profitability with a consistent increase in gross profit margin from 23.5% in 2019 to 31.4% in 2024. The net profit margin has also improved significantly from 9.9% in 2019 to 17.2% in 2024, reflecting efficient cost management. Revenue growth has been solid, especially noticeable in 2021, but slowed slightly in 2024. The EBIT and EBITDA margins have shown consistent strength, indicating robust operational efficiency.85
Very Positive
Balance Sheet
The balance sheet reflects a strong equity position with an equity ratio improving from 51% in 2019 to 69.2% in 2024, indicating financial stability and a low reliance on debt financing. The debt-to-equity ratio has decreased over the years, showcasing effective leverage management. Return on equity has been strong, supported by increasing net income, although it slightly dipped in 2024 due to a substantial increase in stockholders' equity.80
Positive
Cash Flow
PulteGroup's cash flow statement indicates healthy cash generation with a strong operating cash flow to net income ratio, consistently above 0.5. The free cash flow growth rate was exceptional in 2021, but has shown volatility, ending with a slight decline in 2024. Despite this, the company maintains a solid free cash flow to net income ratio, demonstrating efficient cash conversion.78
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 17.95B | 16.06B | 16.23B | 13.93B | 11.04B | Gross Profit |
| 5.22B | 4.72B | 4.83B | 3.78B | 2.78B | EBIT |
| 3.90B | 3.43B | 3.45B | 2.64B | 1.79B | EBITDA |
| 3.99B | 3.53B | 3.52B | 2.63B | 1.83B | Net Income Common Stockholders |
| 3.08B | 2.60B | 2.62B | 1.95B | 1.41B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 2.24B | 2.32B | 1.05B | 1.78B | 2.58B | Total Assets |
| 17.36B | 16.09B | 14.80B | 13.35B | 12.21B | Total Debt |
| 2.25B | 2.55B | 2.63B | 2.66B | 3.16B | Net Debt |
| 641.19M | 746.82M | 1.58B | 876.08M | 581.92M | Total Liabilities |
| 5.24B | 5.70B | 5.88B | 5.86B | 5.64B | Stockholders Equity |
| 12.12B | 10.38B | 8.91B | 7.49B | 6.57B |
| Cash Flow | Free Cash Flow | |||
| 1.56B | 2.10B | 555.80M | 931.24M | 1.73B | Operating Cash Flow |
| 1.68B | 2.20B | 668.47M | 1.00B | 1.78B | Investing Cash Flow |
| -94.48M | -129.09M | -171.74M | -124.13M | -107.95M | Financing Cash Flow |
| -1.78B | -1.31B | -1.24B | -1.68B | -295.62M |
PulteGroup Technical Analysis
Negative
102.90
Price Trends
109.61
Negative
120.79
Negative
122.10
Negative
Market Momentum
-2.60
Positive
40.36
Neutral
33.53
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PHM, the sentiment is Negative. The current price of 102.9 is below the 20-day moving average (MA) of 105.73, below the 50-day MA of 109.61, and below the 200-day MA of 122.10, indicating a bearish trend. The MACD of -2.60 indicates Positive momentum. The RSI at 40.36 is Neutral, neither overbought nor oversold. The STOCH value of 33.53 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for PHM.
PulteGroup Risk Analysis
PulteGroup disclosed 24 risk factors in its most recent earnings report. PulteGroup reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
PulteGroup Peers Comparison
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $39.68B | 8.90 | 18.28% | 1.11% | 2.12% | 1.63% | |
75 Outperform | $4.38B | 7.19 | 16.13% | 1.67% | 8.10% | 20.03% | |
74 Outperform | $20.83B | 7.00 | 25.44% | 0.80% | 11.74% | 25.66% | |
69 Neutral | $10.78B | 7.46 | 19.36% | 0.85% | 5.86% | 12.20% | |
67 Neutral | $31.26B | 8.30 | 14.11% | 1.70% | 3.47% | 4.22% | |
66 Neutral | $21.54B | 14.19 | 39.95% | ― | 10.81% | 10.16% | |
60 Neutral | $13.01B | 10.45 | 0.79% | 3.53% | 1.60% | -22.47% |
* Consumer Cyclical Sector Average
Performance Comparison
PHM
PulteGroup
102.90
-7.78
-7.03%
DHI
DR Horton
125.92
-24.58
-16.33%
KBH
KB Home
60.74
-6.74
-9.99%
LEN
Lennar
118.75
-33.96
-22.24%
NVR
NVR
7,201.71
-507.56
-6.58%
TOL
Toll Brothers
108.11
-9.21
-7.85%
PulteGroup Earnings Call Summary
Earnings Call Date: Jan 30, 2025 | % Change Since: -8.93% | Next Earnings Date: Apr 22, 2025
Earnings Call Sentiment Neutral
PulteGroup demonstrated strong financial performance and shareholder returns with record revenues and industry-leading gross margins. However, they faced challenges with increased land costs, buyer incentives, and higher speculative inventory. The company remains optimistic about long-term demand but anticipates flat volume growth for 2025.Highlights
Record Home Sale Revenues
PulteGroup generated record home sale revenues of $17.3 billion in 2024, with a 9% increase in home deliveries (31,219 homes) over the previous year.
Strong Financial Services Performance
The financial services operations reported a pre-tax income of $210 million, up from $133 million last year.
Efficient Overhead Management
SG&A expenses amounted to 7.6% of home sale revenues, highlighting efficient overhead management.
Continued Land Investment
PulteGroup invested $5.3 billion in new land, increasing their controlled lot inventory to 235,000 lots.
Shareholder Returns
The company returned $1.7 billion to investors, including $1.2 billion through share repurchases and $168 million in dividends.
Industry-Leading Gross Margins
Reported full-year gross margins were 28.9%, maintaining industry-leading status.
Lowlights
Increase in Land Costs
Land costs increased by 10% year-over-year, impacting future margins.
Increase in Buyer Incentives
Buyer incentives increased to 7.2%, reflecting a more competitive market environment.
Flat Volume Growth Expected
Despite community count growth, volume growth is expected to be flat in 2025 due to the softer demand environment.
Higher Spec Inventory
Speculative inventory increased to 53% of total production, above the desired 40-45% range.
Company Guidance
During the PulteGroup Fourth Quarter 2024 Earnings Conference Call, several key metrics and future guidance were discussed. PulteGroup reported delivering 31,219 homes in 2024, marking a 9% increase from the previous year. The company achieved record home sale revenues of $17.3 billion with industry-leading full-year gross margins of 28.9%. Their net operating margin for the year was 21.3%. In terms of financial services, pre-tax income rose to $210 million, up from $133 million in the previous year. The company's SG&A was 7.6% of home sale revenues, aided by insurance benefits. PulteGroup's cash flow from operations was $1.7 billion, following a $5.3 billion investment in new land. They also returned $1.7 billion to investors through share repurchases, dividends, and the early retirement of senior notes. For 2025, the company expects to deliver 31,000 closings, with the average sales price expected to be between $560,000 and $570,000. Gross margins are anticipated to be approximately 27% in the first quarter, with a range of 26.5% to 27% for the rest of the year, assuming consistent buyer incentives. The Board has approved a $1.5 billion increase to the share repurchase authorization, reflecting confidence in continued financial success despite ongoing affordability challenges.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.