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Pultegroup (PHM)
NYSE:PHM
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PulteGroup
(NYSE:PHM)
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Rating:74Outperform
Price Target:
$143.00
▲(12.54% Upside)
PHM scores well on fundamentals—strong profitability and a conservative balance sheet—while valuation is supportive at a ~11x P/E. The score is held back by cash flow volatility and softer near-term outlook factors from the latest call (elevated incentives, rising lot costs, and reduced 2026 cash flow guidance). Technicals are constructive but not strongly bullish.
Positive Factors
High and resilient margins
Sustained high gross and operating margins provide a structural buffer against cyclical revenue swings, supporting cash generation and return on capital. Higher margins also enable flexibility on incentives and land spend while preserving profitability as volumes normalize over multiple quarters.
Conservative, improving balance sheet
A strong liquidity position and negative net debt-to-capital give the company durable financial flexibility to invest in land, fund buybacks, and weather housing cycles. Conservative leverage reduces refinancing risk and supports disciplined capital allocation over the next several quarters.
Large, controlled land pipeline
A deep, controllable lot position supports multi-year volume capacity and shields supply constraints, enabling steady community rollouts and margin management. Disciplined land investment allows paced starts and reduces reliance on costly market buys, aiding medium-term volume visibility.
Negative Factors
Severe free cash flow volatility
An almost total FCF collapse in 2025 underscores working-capital and timing risks in homebuilding. Persistent cash volatility can constrain buybacks, land funding and execution on strategy; smoothing cash conversion is critical to maintaining durable capital returns and investment plans.
Rising lot costs pressure margins
Material lot cost inflation is a structural headwind to gross margins unless offset by price, mix, or efficiency. With sizable planned land spend and only modest community growth, sustained higher lot costs can compress returns on new starts and force tradeoffs between volume and margin.
Regional demand softness and incentives
Localized weakness, higher incentives and rising cancellations increase the need for price concessions and lengthen selling cycles. These trends can erode margins and inventory turnover regionally for multiple quarters, requiring tactical price or product adjustments to restore absorption.
PulteGroup (PHM) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$24.38B
Dividend Yield0.78%
Average Volume (3M)1.63M
Price to Earnings (P/E)11.2
Beta (1Y)0.76
Revenue Growth1.76%
EPS Growth-4.24%
CountryUS
Employees6,793
SectorConsumer Cyclical
Sector Strength84
IndustryResidential Construction
Share Statistics
EPS (TTM)2.56
Shares Outstanding194,916,870
10 Day Avg. Volume1,716,835
30 Day Avg. Volume1,627,614
Financial Highlights & Ratios
PEG Ratio-0.43
Price to Book (P/B)1.79
Price to Sales (P/S)1.34
P/FCF Ratio13.28K
Enterprise Value/Market Cap1.02
Enterprise Value/Revenue1.43
Enterprise Value/Gross Profit5.35
Enterprise Value/Ebitda8.19
Forecast
1Y Price Target
$138.70Price Target Upside9.15% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering13
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
PulteGroup Business Overview & Revenue Model
Company DescriptionPulteGroup, Inc., through its subsidiaries, primarily engages in the homebuilding business in the United States. It acquires and develops land primarily for residential purposes; and constructs housing on such land. The company also offers various home designs, including single-family detached, townhomes, condominiums, and duplexes under the Centex, Pulte Homes, Del Webb, DiVosta Homes, American West, and John Wieland Homes and Neighborhoods brand names. As of December 31, 2021, it controlled 228,296 lots, of which 109,078 were owned and 119,218 were under land option agreements. In addition, the company arranges financing through the origination of mortgage loans primarily for homebuyers; sells the servicing rights for the originated loans; and provides title insurance policies, and examination and closing services to homebuyers. PulteGroup, Inc. was formerly known as Pulte Homes, Inc. and changed its name to PulteGroup, Inc. in March 2010. The company was founded in 1950 and is headquartered in Atlanta, Georgia.
How the Company Makes MoneyPulteGroup generates revenue primarily through the sale of newly constructed homes, which constitute the bulk of its income. The company earns money by building and selling homes to individual buyers or through contracts with real estate developers and investors. Key revenue streams include the sale of completed homes, homebuilding-related services, and land development. Additionally, PulteGroup benefits from partnerships with various suppliers and contractors for materials and construction services, which can enhance operational efficiency and cost management. The company's financial performance is also influenced by market demand, interest rates, and trends in the housing market, which affect overall sales volumes and pricing.
PulteGroup Key Performance Indicators (KPIs)
Any
Revenue by Segment
Breaks down revenue by business segments, revealing which areas are driving growth and where the company may focus its strategic efforts.
Breaks down revenue by business segments, revealing which areas are driving growth and where the company may focus its strategic efforts.
Data provided by:
The Fly
The FlyPulteGroup Earnings Call Summary
Earnings Call Date:Jan 29, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 28, 2026
Earnings Call Sentiment Positive
The call presents a largely positive picture driven by strong full-year results (29.5k+ closings, $16.7B revenue, $2.2B net income), robust cash and balance sheet metrics, a large land pipeline, disciplined land investment, share repurchases, and strategic focus on core homebuilding (divestiture of ICG). Offsetting negatives include Q4 softness—revenue and EPS declines, margin compression driven by impairments and elevated incentives, lower financial services income, rising lot cost expectations (7%–8%), regional demand weakness (Texas/West), and a reduced 2026 cash flow outlook (~$1B). Management provided conservative 2026 margin and volume guidance and emphasized operational discipline and a return toward more built-to-order mix. On balance, the company's strong full-year operating performance, financial flexibility, and strategic actions outweigh the near-term headwinds and one-time charges, while management acknowledges and is addressing market softness and cost pressure.Q4-2025 Updates
Positive Updates
Strong Full-Year Financial Performance
Closed over 29,500 homes and generated home sale revenues of $16.7 billion in 2025; reported full-year net income of $2.2 billion ($11.12 per share), the fifth most profitable year in company history.
High Full-Year Margins
Full-year gross margin of 26.3% and operating margin of 16.9%, levels described as among the highest in the company's 75-year history.
Robust Cash Generation and Balance Sheet
Generated $1.9 billion of cash flow from operations in 2025 and ended the year with $2.0 billion of cash; net debt-to-capital was negative 3% (debt-to-capital 11.2%).
Significant Land Investment and Pipeline
Invested $5.2 billion in land acquisition and development in 2025 (52% into development); ended year with 235,000 lots under control and expect community count growth of 3%–5% in 2026.
Share Repurchases and Capital Return
Repurchased 10.6 million shares for $1.2 billion in 2025 (Q4 repurchases: 2.4 million for $300 million); $983 million remaining under repurchase authorization.
Buyer Mix Diversification and Active Adult Strength
2025 closings mix: 38% first-time, 40% move-up, 22% active adult; active adult sign-ups increased 6% year-over-year and +14% in Q4 YoY, supporting higher gross margins from Del Webb communities.
Forward Guidance and Operational Targets
2026 guidance: closings 28,500–29,000; Q1 closings 5,700–6,100; average sales price guide $550k–$560k for Q1 and FY; gross margin guide 24.5%–25% for Q1 and FY; SG&A guide 9.5%–9.7% for FY (Q1 ~11.5%).
Strategic Portfolio Actions
Announced decision to divest off-site manufacturing operations (ICG) to focus on core homebuilding, expecting to benefit from external off-site innovation while reallocating capital to core business.
Operational Discipline on Spec Inventory
Reduced spec inventory (spec in production down 18% from end of 2024); ended year with 13,705 homes in production (7,216 speculative) and maintained disciplined starts relative to sales.
Industry Recognition and Long-Term TSR
PulteGroup ranked #1 in total shareholder returns among homebuilders for both the past year and the past decade, reflecting sustained operating performance.
Negative Updates
Q4 Revenue and Closing Decline
Q4 home sale revenues declined 5% YoY to $4.5 billion; closings decreased 3% YoY to 7,821 homes and average sales price fell 1% YoY to $573,000.
Quarterly Margin Compression
Q4 gross margin fell to 24.7% from 27.5% in prior-year Q4 (down ~280 bps), including $35 million (80 bps) of land impairment charges and elevated incentives.
Elevated Incentives
Incentives in Q4 were 9.9% of gross sales price vs. 7.2% in prior-year Q4 and 8.9% for full-year 2025; management expects incentives to remain elevated into early 2026.
Q4 Earnings Decline
Q4 net income decreased to $502 million ($2.56 per share) from $913 million ($4.43 per share) in prior-year Q4 (down ~45%); pre-tax income for Q4 was $655 million.
Financial Services Pressure
Q4 financial services pretax income fell to $35 million from $51 million YoY (down ~31%); mortgage capture rate declined to 84% from 86%.
Rising Lot Costs Expected
Management expects lot costs to increase 7%–8% year-over-year in 2026, which will pressure margins absent offsetting actions.
Lower 2026 Cash Flow Outlook
Projected 2026 cash flow generation of approximately $1 billion, down from $1.9 billion in 2025, assuming $5.4 billion land spend and planned operational shifts.
Regional Demand Weakness
Persistent sluggish demand in Texas and several Western markets; company noted need for price/actions to clear finished spec inventory in these areas.
One-Time Charges and Divestiture Costs
Q4 other expenses included a $81 million charge related to the expected divestiture of off-site manufacturing operations and additional land impairment charges (~$22 million referenced).
Rising Cancellation Rate
Q4 cancellation rate as a percentage of starting backlog increased to 12% from 10% in the prior-year quarter, reflecting some buyer volatility in the period.
Company Guidance
PulteGroup guided to 5,700–6,100 home closings in Q1 2026 and 28,500–29,000 for the full year, with an average sales price of $550,000–$560,000 for both Q1 and FY2026; gross margin is expected to be 24.5%–25% for Q1 and the year, house costs flat to slightly down, and lot costs up 7%–8% year-over-year. The company expects full‑year SG&A of 9.5%–9.7% of home sale revenue (Q1 ≈11.5%), plans $5.4 billion of land acquisition and development spend, and projects 2026 cash flow of about $1.0 billion assuming 3%–5% average community count growth each quarter versus 2025. PulteGroup enters 2026 with $2.0 billion of cash, 235,000 lots controlled, net debt-to-capital of −3%, and an expected effective tax rate of ~24.5%.PulteGroup Financial Statement Overview
Summary
Strong profitability and a conservatively levered, improving balance sheet support a solid fundamental profile. The main offset is cash flow volatility, including a very sharp free cash flow decline in 2025 (annual) and signs of demand/margin cooling versus the prior peak period.Income Statement
Profitability is strong with consistently healthy gross and net margins (2020–2024 net margin roughly in the low-to-high teens), and earnings expanded materially from 2020 to 2024 alongside solid revenue growth in most years. However, momentum softened in 2025 (annual) with revenue down about 1.8% and net income falling versus 2024, signaling a cooler demand/pricing environment after a strong multi-year run.78
Positive
Balance Sheet
Leverage appears conservative and improving over time: debt-to-equity declined from ~0.48 (2020) to ~0.19 (2024), while equity steadily built alongside strong returns on equity (roughly mid-20%+ in 2021–2024). The main watch item is the 2025 balance sheet data set not including leverage/return ratios, but the provided debt and equity levels still suggest a solid capital position.84
Very Positive
Cash Flow
Cash generation has generally been strong, with free cash flow closely tracking earnings in 2020–2024 (free cash flow to net income ~0.83–0.97) and operating cash flow typically covering net income around ~1x in 2023–2024. The key weakness is volatility: operating and free cash flow swung significantly (notably weaker in 2022 vs. 2023–2024), and 2025 (annual) shows an extreme free cash flow decline (-99.9%), which raises concern about working-capital swings and/or reinvestment timing in a cyclical housing market.66
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 17.31B | 17.95B | 16.06B | 16.00B | 13.74B |
| Gross Profit | 4.57B | 5.22B | 4.72B | 4.83B | 3.78B |
| EBITDA | 3.02B | 4.10B | 3.53B | 3.51B | 2.58B |
| Net Income | 2.22B | 3.08B | 2.60B | 2.62B | 1.95B |
Balance Sheet | |||||
| Total Assets | 18.05B | 17.36B | 16.09B | 14.80B | 13.35B |
| Cash, Cash Equivalents and Short-Term Investments | 2.01B | 1.65B | 1.85B | 1.09B | 1.83B |
| Total Debt | 2.16B | 2.34B | 2.62B | 2.81B | 2.82B |
| Total Liabilities | 5.06B | 5.24B | 5.70B | 5.88B | 5.86B |
| Stockholders Equity | 12.99B | 12.12B | 10.38B | 8.91B | 7.49B |
Cash Flow | |||||
| Free Cash Flow | 1.75B | 1.56B | 2.10B | 555.80M | 931.24M |
| Operating Cash Flow | 1.87B | 1.68B | 2.20B | 668.47M | 1.00B |
| Investing Cash Flow | -80.42M | -94.48M | -129.09M | -171.74M | -124.13M |
| Financing Cash Flow | -1.44B | -1.78B | -1.31B | -1.24B | -1.68B |
PulteGroup Technical Analysis
Positive
127.07
Price Trends
124.23
Positive
124.81
Positive
117.81
Positive
Market Momentum
0.65
Positive
52.76
Neutral
35.72
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PHM, the sentiment is Positive. The current price of 127.07 is above the 20-day moving average (MA) of 126.79, above the 50-day MA of 124.23, and above the 200-day MA of 117.81, indicating a bullish trend. The MACD of 0.65 indicates Positive momentum. The RSI at 52.76 is Neutral, neither overbought nor oversold. The STOCH value of 35.72 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $13.73B | 10.71 | 16.89% | 0.70% | 1.11% | -10.03% | |
74 Outperform | $24.38B | 11.25 | 17.67% | 0.78% | 1.76% | -4.24% | |
73 Outperform | $43.12B | 13.51 | 13.63% | 1.14% | -6.93% | -19.41% | |
71 Outperform | $5.96B | 7.42 | 14.31% | ― | 6.98% | 9.74% | |
70 Outperform | $21.68B | 17.65 | 33.18% | ― | 3.61% | -6.94% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
60 Neutral | $26.76B | 13.69 | 8.26% | 1.91% | -3.78% | -44.21% |
* Consumer Cyclical Sector Average
PHM
PulteGroup
127.07
17.57
16.04%
DHI
DR Horton
149.77
11.65
8.44%
LEN
Lennar
108.80
-17.80
-14.06%
NVR
NVR
7,718.38
-70.17
-0.90%
TOL
Toll Brothers
145.48
12.75
9.60%
TMHC
Taylor Morrison
61.64
-2.58
-4.02%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.