Here's my take on Pulte's stock price for 2012 ... It will track homes sales and starts first and job growth second. Valuation analysis will prove fruitless although many will suggest (probably all year) that its over-valued ... and you should sell it and buy Lennar. When I feel that way I just take a trip to a subdivision where the two HB's have communities ... and drive through them and tour the models and speak to the reps ... Pulte is so much more impressive. Then I go to a Del Webb (if near buy) and watch the owner's out playing lawn bowling or planting in the community gardens .. Pulte's different and ... if management can continue to keep the cost structure in line and keep improving margins (be a lot easier when credit eases up) they'll ascend the the #1 builder status in the mid-range and active adult segments ... and be valued accordingly.
When you start talking about fundamentals and valuation, I can't help but think about my investment in BRP. Yes - it's small, little, etc - as far as public exposure - and as far as I know, Danstv and I are the only posters on this board that own it; but it's backlog is about the same as the median size builders - and its stock price has been ramping lately - so I am happy with that. They are still trading at just about book, which is 50% below most of the other builders, so I can afford to be patient at these prices.
Earnings are in the next couple of days. I think they will be better than the other builders proportionately because half of their sales are from the white-hot market in Edmonton and Calgary (business centers for the Northern Alberta oil industry). Their Northern CA division also sold out of their homes last Q, and I think that is likely going to be on the earnings statement as well.
The one fly in the ointment is they are going to have to break ground on several new communities in expensive areas this year (Rohnert Park and San Jose, CA) and that is going to raise their SG&A.
Agreed on land purchases and also their finally putting to bed the Centex write-downs ... for me though, as a long-term investor ... I need to see quality product and service ... Of course I only see it from my vantage points in So Cal and Arizona .... but I think their product is superior to the competition in their price points.
Management also seems to be putting out the right message re. operational efficiencies and streamlining, and a corporate focus on higher margin communities ...