PulteGroup Inc. PHM reported stellar results in first-quarter 2024, wherein earnings and revenues surpassed the Zacks Consensus Estimates.

Also, both metrics increased year over year on favorable demand conditions and its balanced operating model, which allows the company to more effectively meet the individual needs of first-time, move-up and active-adult consumers.

PHM’s president and CEO, Ryan Marshall, said, “Given PulteGroup’s broad operating platform and deep product portfolio, along with the powerful incentive programs we can offer to help improve the overall affordability equation, we are well positioned to expand our market share while helping to provide much needed new housing stock.”

Shares of this notable homebuilder gained 0.4% in the pre-market trading session on Apr 23. Its solid first-quarter result helped the company to drive a return on equity of 27.3%.

Inside the Headlines

PHM reported adjusted earnings per share of $2.87, which topped the consensus mark of $2.36 by 21.6% and increased 22.1% from $2.35 reported a year ago.

PulteGroup, Inc. Price, Consensus and EPS Surprise PulteGroup, Inc. Price, Consensus and EPS Surprise

PulteGroup, Inc. price-consensus-eps-surprise-chart | PulteGroup, Inc. Quote

Total revenues of $3.95 billion beat the consensus mark of $3.59 billion by 10.1% and increased 10.4% from the year-ago figure of $3.58 billion.

Segment Discussion

PulteGroup primarily operates through two business segments — Homebuilding and Financial Services.

Revenues from the Homebuilding segment were up 9.6% year over year to $3.86 billion. Home sale revenues of $3.82 billion increased 9.5% year over year, mainly due to the solid homes closed. Land sale revenues rose 23.8% from a year ago to $37.2 million.

The number of homes closed increased 11% to 7,095 units from the year-ago level. The average selling price of homes delivered was $538,000, down 1.3% year over year.

New home orders gained 14% year over year to 8,379 units for the quarter, benefiting from higher gross orders and a lower cancelation rate. The value of new orders also rose 24% from a year ago to $4.7 billion. The cancelation rate was 10% of the beginning backlog, down 300 basis points (bps) from the prior-year period.

Most importantly, its backlog, which represents orders yet to be closed, was 13,430 units, up 2.3% year over year. In addition, potential housing revenues from the backlog increased 2.8% from the prior-year quarter to $8.2 billion.

Home sales gross margin was up 50 bps year over year to 29.6% in the reported quarter, backed by ongoing strength in homebuyer demand and a favorable geographic mix of homes closed. SG&A expenses (as a percentage of home sales revenues) improved 20 bps to 9.4% from 9.6% a year ago.

Revenues from the Financial Services segment increased 59.4% year over year to $92.4 million. Pretax income for the segment increased to $41 million from the year-ago figure of $14 million.



Financials

At the end of the first quarter, cash, cash equivalents and restricted cash were $1.77 billion, down from $1.85 billion in 2023-end. Net debt-to-capital was 1.7% at the first-quarter end, up from 1.1% at 2023-end.

Net cash provided by operating activities was $239.8 million in the first quarter compared with $711.4 million in the prior-year period.

In the reported quarter, the company repurchased 2.3 million common shares for $246 million at an average price of $106.73 per share.

Zacks Rank

PulteGroup currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Peer Releases

D.R. Horton, Inc. DHI reported second-quarter fiscal 2024 (ended Mar 31, 2024) results, with earnings and revenues surpassing Zacks Consensus Estimate.

On a year-over-year basis, both the top and bottom lines increased. The upside was backed by the supply of new and existing homes as affordable price points remain limited and robust housing demand is supported by favorable demographics amid elevated inflation and mortgage/interest rates.

KB Home KBH reported better-than-expected results in first-quarter fiscal 2024 (ended Feb 29, 2024). Both earnings and revenues beat the Zacks Consensus Estimate and rose on a year-over-year basis.

Looking forward to the second quarter and full-year 2024, KBH foresees enhanced conditions in the housing market and ongoing positive trends in the supply chain. Leveraging the advantages of its Built to Order model, which provides buyers with choices, flexibility and affordability, the company is confident in its ability to effectively navigate potential fluctuations in housing market conditions.

Lennar Corporation LEN reported first-quarter fiscal 2024 results, wherein its earnings surpassed the Zacks Consensus Estimate but revenues missed the same. On a year-over-year basis, both the top and bottom lines increased, given the company’s emphasis on maintaining a steady production rate to drive sales momentum.

Lennar strategically utilized pricing, incentives, marketing expenditure and dynamic pricing insights to ensure steady sales volume despite fluctuations in interest rates.

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