PulteGroup (PHM) Stock: A Comprehensive Analysis of Earnings, Revenue Growth, and Valuation
PulteGroup (PHM) has been one of the most searched stocks on Zacks.com recently, with shares returning +1.3% over the past month compared to the Zacks S&P 500 composite's +3.6% change. However, the Zacks Building Products - Home Builders industry, which PulteGroup falls in, has lost 0.7% during this period. The key question is what could be the stock's future direction.
At Zacks, we prioritize evaluating the change in a company's earnings projection as we believe the fair value for its stock is determined by the present value of its future stream of earnings. Sell-side analysts covering the stock are revising their earnings estimates to reflect the latest business trends. For the current quarter, PulteGroup is expected to post earnings of $2.94 per share, representing a year-over-year change of -17.9%. The consensus earnings estimate for the current fiscal year is $11.48, indicating a year-over-year change of -21.9%, which has remained unchanged over the last 30 days. For the next fiscal year, the consensus earnings estimate is $12.11, indicating a change of +5.5% from what PulteGroup is expected to report a year ago.
The Zacks Rank, our proprietary stock rating tool, is a more conclusive indicator of a stock's near-term price performance as it effectively harnesses the power of earnings estimate revisions. The recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #4 (Sell) for PulteGroup.
In terms of revenue growth, the consensus sales estimate for the current quarter is $4.39 billion, indicating a year-over-year change of -4.5%. For the current and next fiscal years, estimates are $17.24 billion and $17.75 billion, respectively, indicating -4% and +3% changes, respectively. PulteGroup reported revenues of $3.89 billion in the last reported quarter, representing a year-over-year change of -1.4%. EPS for the same period was $2.57 compared to $2.87 a year ago. The company beat consensus EPS estimates in each of the trailing four quarters and topped consensus revenue estimates each time over this period.
In terms of valuation, PulteGroup is graded B on the Zacks Value Style Score, indicating that it is trading at a discount to its peers. Comparing the company's valuation multiples such as price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF) to its own historical values and relative to its peers helps ascertain whether its stock is fairly valued, overvalued, or undervalued.
In conclusion, while market buzz about PulteGroup may be worth paying attention to, its Zacks Rank #4 suggests that it may underperform the broader market in the near term. However, investors should consider all the facts and information available on Zacks.com before making any investment decisions.
