PulteGroup Rallies 18.2% as Analysts Trim Near-Term Earnings Projections
PulteGroup shares gained 18.2% over the past month, even as Wall Street analysts reduced earnings projections following third-quarter results that missed expectations.
PulteGroup, Inc. shares climbed 18.2% over the past month, outpacing the broader market as the Zacks S&P 500 composite fell 5.6%. The company's industry group, the Zacks Building Products - Home Builders index, advanced 10.3% across the same timeframe. Despite the recent stock advance, PulteGroup currently carries a Zacks Rank #4 (Sell), shaped by a series of downward revisions to analyst profit projections.
Sell-side analysts covering the builder have cut their expectations recently. For the current quarter, the consensus projection stands at $2.58 per share, representing a 20% reduction over the prior 30-day window and pointing to a 10.4% decline from the same quarter last year. For the full year, consensus earnings are forecast at $9.37 per share, an 18.1% drop from the prior year and a 7% downward adjustment over the past month. Looking ahead to the next fiscal year, the consensus earnings projection is $9.35 per share, reflecting a 13.8% cut over the preceding month.
The downward adjustments follow PulteGroup's third-quarter financial results released in late October. The homebuilder recorded adjusted earnings of $2.53 per share, failing to meet the Zacks Consensus Estimate of $2.63 per share and falling below the $2.96 per share earned in the year-ago period. Net income landed at $476 million, down from $586 million a year earlier. Total quarterly revenues of $3.97 billion fell short of the $4.4 billion generated in the third quarter of the prior year, missing consensus projections by 3.85%.
Company operational updates showed 6,208 net new home orders during the third quarter, a 6% decline compared to the prior year. Closings slipped 9% to 6,876 homes, while home sale revenue dropped 9% to $3.9 billion. Gross margins contracted 140 basis points year-over-year to 24.8%, influenced by 10.4% incentives and $26 million in land impairments. PulteGroup's total order backlog expanded to 10,298 homes valued at $6.4 billion, rising from 9,888 homes worth $6.2 billion a year prior.
PulteGroup returned nearly $400 million to shareholders during the third quarter through share buybacks and dividends, lifting nine-month shareholder returns to $1.2 billion. The company repurchased 2.8 million shares for $350 million in the quarter at an average price of $124.70. PulteGroup ended the quarter with $1.4 billion in cash reserves, a debt-to-capital ratio of 12.1%, and a net debt-to-capital ratio of 3%.