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Can Higher Pricing Benefit PulteGroup's (PHM) Q4 Earnings?
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PulteGroup, Inc.’s (PHM - Free Report) Homebuilding segment — accounting for 97% of total revenues — is expected to have registered growth, given strong demand and higher pricing. Consequently, the segment is likely to contribute to overall revenues when it reports fourth-quarter 2021 results on Feb 1.
The company exhibited a solid performance in the first three quarters of 2021, with the stock climbing 14.5% compared with the Zacks Building Products - Home Builders industry’s 10.4% rally. PulteGroup has been riding high on its focus on entry-level buyers and protecting liquidity, prudent management of cash flows as well as land investment strategy. Yet, continuous supply chain issues may have been a concern.
Image Source: Zacks Investment Research
Click here to know how the company’s overall Q4 performance is expected to be.
A Look at Q4 Segmental Performance
PulteGroup’s Homebuilding segment is expected to have registered growth, courtesy of higher deliveries and average selling price or ASP.
The Zacks Consensus Estimate for Homebuilding revenues of $4.05 billion suggests an increase of 31.2% on a year-over-year basis.
PulteGroup expects ASP within $485,000-$490,000, indicating an increase of 10% from the year-ago period at the midpoint. It expects deliveries within 8,500 homes. At the midpoint, the guided range indicates an increase of 24% from 6,860 units in the year-ago period.
The consensus mark for ASP is $484,000, which points to an 8.5% year-over-year improvement. For the quarter to be reported, the consensus mark for the number of homes closed is 8,502, which points to 25.2% year-over-year growth.
Solid demand arising from prospering U.S. housing market scenario, prudent land investment strategy and focus on entry-level buyers is expected to have benefited PulteGroup in the fourth quarter. Yet, the company has been witnessing supply chain challenges, resulting in construction-related delays. The labor market also tightened with limited availability of labor, arresting the rapid growth in housing production. These headwinds might have impacted the company’s top line to some extent.
Overall Q4 Earnings & Revenue Expectations
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings is currently pegged at $2.29 per share, indicating 53.7% growth from the year-ago figure of $1.49. Also, the consensus mark for revenues is $4.16 billion, suggesting 30.4% year-over-year growth.
Other top-ranked stocks in the broader construction space include KB Home (KBH - Free Report) , Meritage Homes Corporation (MTH - Free Report) and Toll Brothers, Inc. (TOL - Free Report) , each sporting a Zacks Rank #1.
KB Home currently carries a Zacks Rank #1. Its successful execution of strategic initiatives to boost profitability and focus on entry-level LiVE.NOW homes bode well.
MTH’s earnings are expected to rise 21.5% year over year in 2022.
Meritage Homes currently carries a Zacks Rank #1. Robust backlog level, a strong lineup of community openings and solid return-focused growth model will help KB Home generate as much as $7.6 billion in housing revenues and double-digit operating margin in fiscal 2022.
KB Home’s earnings are expected to rise 67.9% year over year in fiscal 2022.
Toll Brothers currently sports a Zacks Rank #1. This Horsham, PA-based luxury homebuilder builds single-family detached and attached home communities; master-planned luxury residential resort-style golf communities; and urban low, mid, and high-rise communities, principally on the land it develops and improves. It has been benefiting from the strategy of broadening product lines, price points and geographies.
Toll Brothers’ earnings for fiscal 2022 are expected to rise 49.9% year over year.
Image: Bigstock
Can Higher Pricing Benefit PulteGroup's (PHM) Q4 Earnings?
PulteGroup, Inc.’s (PHM - Free Report) Homebuilding segment — accounting for 97% of total revenues — is expected to have registered growth, given strong demand and higher pricing. Consequently, the segment is likely to contribute to overall revenues when it reports fourth-quarter 2021 results on Feb 1.
The company exhibited a solid performance in the first three quarters of 2021, with the stock climbing 14.5% compared with the Zacks Building Products - Home Builders industry’s 10.4% rally. PulteGroup has been riding high on its focus on entry-level buyers and protecting liquidity, prudent management of cash flows as well as land investment strategy. Yet, continuous supply chain issues may have been a concern.
Click here to know how the company’s overall Q4 performance is expected to be.
A Look at Q4 Segmental Performance
PulteGroup’s Homebuilding segment is expected to have registered growth, courtesy of higher deliveries and average selling price or ASP.
The Zacks Consensus Estimate for Homebuilding revenues of $4.05 billion suggests an increase of 31.2% on a year-over-year basis.
PulteGroup expects ASP within $485,000-$490,000, indicating an increase of 10% from the year-ago period at the midpoint. It expects deliveries within 8,500 homes. At the midpoint, the guided range indicates an increase of 24% from 6,860 units in the year-ago period.
The consensus mark for ASP is $484,000, which points to an 8.5% year-over-year improvement. For the quarter to be reported, the consensus mark for the number of homes closed is 8,502, which points to 25.2% year-over-year growth.
Solid demand arising from prospering U.S. housing market scenario, prudent land investment strategy and focus on entry-level buyers is expected to have benefited PulteGroup in the fourth quarter. Yet, the company has been witnessing supply chain challenges, resulting in construction-related delays. The labor market also tightened with limited availability of labor, arresting the rapid growth in housing production. These headwinds might have impacted the company’s top line to some extent.
Overall Q4 Earnings & Revenue Expectations
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings is currently pegged at $2.29 per share, indicating 53.7% growth from the year-ago figure of $1.49. Also, the consensus mark for revenues is $4.16 billion, suggesting 30.4% year-over-year growth.
PulteGroup — a Zacks Rank #2 (Buy) company — surpassed earnings estimates in 18 of the trailing 20 quarters. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
3 Construction Stocks to Bet On
Other top-ranked stocks in the broader construction space include KB Home (KBH - Free Report) , Meritage Homes Corporation (MTH - Free Report) and Toll Brothers, Inc. (TOL - Free Report) , each sporting a Zacks Rank #1.
KB Home currently carries a Zacks Rank #1. Its successful execution of strategic initiatives to boost profitability and focus on entry-level LiVE.NOW homes bode well.
MTH’s earnings are expected to rise 21.5% year over year in 2022.
Meritage Homes currently carries a Zacks Rank #1. Robust backlog level, a strong lineup of community openings and solid return-focused growth model will help KB Home generate as much as $7.6 billion in housing revenues and double-digit operating margin in fiscal 2022.
KB Home’s earnings are expected to rise 67.9% year over year in fiscal 2022.
Toll Brothers currently sports a Zacks Rank #1. This Horsham, PA-based luxury homebuilder builds single-family detached and attached home communities; master-planned luxury residential resort-style golf communities; and urban low, mid, and high-rise communities, principally on the land it develops and improves. It has been benefiting from the strategy of broadening product lines, price points and geographies.
Toll Brothers’ earnings for fiscal 2022 are expected to rise 49.9% year over year.
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