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Pricing to Aid PulteGroup's (PHM) Homebuilding in Q3 Earnings
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PulteGroup, Inc.’s (PHM - Free Report) Homebuilding segment, accounting for more than 97% of total revenues, is expected to have registered growth, mainly attributable to higher housing prices. Consequently, the segment is likely to contribute to overall revenues when it reports third-quarter 2022 results on Oct 25.
PulteGroup has exhibited a solid performance so far this year, with the stock outperforming the Zacks Building Products - Home Builders industry. The company has been riding high on its focus on entry-level buyers and liquidity protection, prudent management of cash flows, and land investment strategy. However, accelerating mortgage rates and continuous supply-chain issues pose a concern.
Click here to know how the company’s overall Q3 performance is expected to be.
PulteGroup’s Homebuilding segment is expected to have registered growth, courtesy of a higher average selling price or ASP.
The Zacks Consensus Estimate for Homebuilding revenues of $4.02 billion suggests an increase of 18.7% on a year-over-year basis.
PulteGroup expects ASP within $540,000-$550,000, indicating an increase from $474,000 registered a year ago. It expects home deliveries within 7,000-7,400, indicating growth (considering the mid-point of the guided range) from 7,007 homes delivered a year ago.
The consensus mark for ASP is $545,000, which points to a 15% year-over-year improvement. For the quarter to be reported, the consensus mark for the number of homes closed is 7,127, which points to a 1.7% year-over-year increase.
A prudent land investment strategy and focus on entry-level buyers are expected to have benefited PulteGroup in the third quarter. However, rising mortgage rates might have impacted the demand for homes in the quarter, which is expected to have reflected in the quarterly sales as well as orders for homes.
Also, the company has been witnessing supply-chain challenges that are resulting in construction-related delays. The labor market tightened with the limited availability of labor, arresting the rapid growth in housing production. These headwinds might have impacted the upcoming results to some extent.
Nonetheless, improved operating leverage and higher pricing are expected to have mitigated the risks. As such, given these cost price dynamics, PHM expects homebuilding gross margins to expand to 30% for third-quarter 2022 from 26.5% in the year-ago period.
SG&A expenses (as a percentage of home sales revenues) for the quarter are expected in the 9.1-9.3% range. The figure was 9.6% a year ago.
Overall Q3 Earnings & Revenue Expectations
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings is currently pegged at $2.75 per share, indicating 51.1% growth from the year-ago figure of $1.82. Also, the consensus mark for revenues is $4.04 billion, suggesting 16.3% year-over-year growth.
PulteGroup, a Zacks Rank #3 (Hold) company, surpassed earnings estimates in 21 of the trailing 23 quarters.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
A Few Recent Construction Releases
Acuity Brands, Inc. (AYI - Free Report) reported solid fourth-quarter fiscal 2022 results. The top and bottom lines surpassed the Zacks Consensus Estimate and increased on a year-over-year basis.
AYI’s solid performance was backed by strong demand across the end markets, along with price increases and product and productivity improvement.
RPM International Inc. (RPM - Free Report) reported impressive results in first-quarter fiscal 2023 (ended Aug 31, 2022), with earnings and sales surpassing their respective Zacks Consensus Estimate and increasing on a year-over-year basis.
RPM’s quarterly performance was driven by the continued implementation of MAP operational improvement initiatives, double-digit sales growth across the segments, strong pricing offset, supply-chain woes, cost inflation, macroeconomic challenges and foreign exchange headwinds.
FAST’s top and bottom lines improved on a year-over-year basis, given the strong demand in markets associated with industrial capital goods and commodities.
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Pricing to Aid PulteGroup's (PHM) Homebuilding in Q3 Earnings
PulteGroup, Inc.’s (PHM - Free Report) Homebuilding segment, accounting for more than 97% of total revenues, is expected to have registered growth, mainly attributable to higher housing prices. Consequently, the segment is likely to contribute to overall revenues when it reports third-quarter 2022 results on Oct 25.
PulteGroup has exhibited a solid performance so far this year, with the stock outperforming the Zacks Building Products - Home Builders industry. The company has been riding high on its focus on entry-level buyers and liquidity protection, prudent management of cash flows, and land investment strategy. However, accelerating mortgage rates and continuous supply-chain issues pose a concern.
Click here to know how the company’s overall Q3 performance is expected to be.
PulteGroup, Inc. Price and EPS Surprise
PulteGroup, Inc. price-eps-surprise | PulteGroup, Inc. Quote
A Look at Q3 Segmental Performance
PulteGroup’s Homebuilding segment is expected to have registered growth, courtesy of a higher average selling price or ASP.
The Zacks Consensus Estimate for Homebuilding revenues of $4.02 billion suggests an increase of 18.7% on a year-over-year basis.
PulteGroup expects ASP within $540,000-$550,000, indicating an increase from $474,000 registered a year ago. It expects home deliveries within 7,000-7,400, indicating growth (considering the mid-point of the guided range) from 7,007 homes delivered a year ago.
The consensus mark for ASP is $545,000, which points to a 15% year-over-year improvement. For the quarter to be reported, the consensus mark for the number of homes closed is 7,127, which points to a 1.7% year-over-year increase.
A prudent land investment strategy and focus on entry-level buyers are expected to have benefited PulteGroup in the third quarter. However, rising mortgage rates might have impacted the demand for homes in the quarter, which is expected to have reflected in the quarterly sales as well as orders for homes.
Also, the company has been witnessing supply-chain challenges that are resulting in construction-related delays. The labor market tightened with the limited availability of labor, arresting the rapid growth in housing production. These headwinds might have impacted the upcoming results to some extent.
Nonetheless, improved operating leverage and higher pricing are expected to have mitigated the risks. As such, given these cost price dynamics, PHM expects homebuilding gross margins to expand to 30% for third-quarter 2022 from 26.5% in the year-ago period.
SG&A expenses (as a percentage of home sales revenues) for the quarter are expected in the 9.1-9.3% range. The figure was 9.6% a year ago.
Overall Q3 Earnings & Revenue Expectations
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings is currently pegged at $2.75 per share, indicating 51.1% growth from the year-ago figure of $1.82. Also, the consensus mark for revenues is $4.04 billion, suggesting 16.3% year-over-year growth.
PulteGroup, a Zacks Rank #3 (Hold) company, surpassed earnings estimates in 21 of the trailing 23 quarters.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
A Few Recent Construction Releases
Acuity Brands, Inc. (AYI - Free Report) reported solid fourth-quarter fiscal 2022 results. The top and bottom lines surpassed the Zacks Consensus Estimate and increased on a year-over-year basis.
AYI’s solid performance was backed by strong demand across the end markets, along with price increases and product and productivity improvement.
RPM International Inc. (RPM - Free Report) reported impressive results in first-quarter fiscal 2023 (ended Aug 31, 2022), with earnings and sales surpassing their respective Zacks Consensus Estimate and increasing on a year-over-year basis.
RPM’s quarterly performance was driven by the continued implementation of MAP operational improvement initiatives, double-digit sales growth across the segments, strong pricing offset, supply-chain woes, cost inflation, macroeconomic challenges and foreign exchange headwinds.
Fastenal Company (FAST - Free Report) reported third-quarter 2022 results, wherein earnings and revenues topped the respective Zacks Consensus Estimate.
FAST’s top and bottom lines improved on a year-over-year basis, given the strong demand in markets associated with industrial capital goods and commodities.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.