We know how he did with his top pick USG. Now he is switching to PHM. Good luck longs. Was it just me, or was the PHM earnings report not so good. Orders werent up much. Not saying things aren't strong. But compared to the other reports this week, PHM was by far the worst from what i could tell.
He alright with his former top pick Fortune Brands (FBHS) now trading over 36 bucks. USG investors need to be patient. Last I checked wallboard is still 8% of the materials cost of a home and they are the market leader. No foreign competition anymore, either. USG should be 40 by 2015. By the way the Street is still undervaluing Pulte's land holdings.
One more thing for you. If you want to figure out how much drywall goes into a house, multiply the square footage of the house by 4.3 and then divide that number by 48. It will give you the number of 4 by 12 sheets of drywall. The current cost of drywall is about $13 per sheet for 1/2 material.
Per the CEO, PHM is focused more on higher returns than order growth.
PulteGroup is increasing prices faster than the rising costs of land, lumber and labor by deliberately limiting the supply offered to consumers and focusing on more expensive houses for move-up buyers, Chief Executive Officer Richard Dugas Jr. said today.
“Volume is not the focus for the company,” Dugas said on a conference call with investors. “It’s driving better returns.”
PulteGroup’s total revenue rose to $1.16 billion from $881 million a year earlier. The company sold 3,833 homes for an average price of $287,000, compared with 3,117 homes for an average $261,000 a year ago. Backlog, an indication of future revenue, jumped to $2.41 billion from $1.59 billion.
Orders climbed 4 percent to 5,200 homes, with 14 percent fewer communities. That trailed growth reported by other homebuilders, said Adam Rudiger, an analyst with Wells Fargo & Co. in Boston. Adjusted gross margin on home sales increased 4.2 percentage points from a year earlier to 22.9 percent.
“Although order growth underperformed peers’ and missed consensus expectations, this shortfall was offset by strong improvement in gross margin,” Rudiger, who rates PulteGroup “market weight,” wrote in a note today.