Should You Be Holding PulteGroup Inc (NYSE:PHM)?
PulteGroup Inc (NYSE:PHM) is a company with exceptional fundamental characteristics. Upon building up an investment case for a stock, we should look at various aspects. In the case of PHM, it is a financially-robust company with a an impressive history of performance, trading at a discount. Below is a brief commentary on these key aspects. For those interested in digger a bit deeper into my commentary, take a look at the report on PulteGroup here.
Excellent balance sheet, good value and pays a dividend
PHM delivered a bottom-line expansion of 26.3% in the prior year, with its most recent earnings level surpassing its average level over the last five years. Not only did PHM outperformed its past performance, its growth also surpassed the Consumer Durables industry expansion, which generated a 11.1% earnings growth. This is what investors like to see! PHM’s strong financial health means that all of its upcoming liability payments are able to be met by its current cash and short-term investment holdings. This indicates that PHM has sufficient cash flows and proper cash management in place, which is a key determinant of the company’s health. PHM’s has produced operating cash levels of 0.32x total debt over the past year, which implies that PHM’s management has put its borrowings into good use by generating enough cash to cover a sufficient portion of borrowings.
PHM’s share price is trading at below its true value, meaning that the market sentiment for the stock is currently bearish. According to my intrinsic value of the stock, which is driven by analyst consensus forecast of PHM’s earnings, investors now have the opportunity to buy into the stock to reap capital gains. Compared to the rest of the consumer durables industry, PHM is also trading below its peers, relative to earnings generated. This supports the theory that PHM is potentially underpriced.
Next Steps:
For PulteGroup, I’ve put together three pertinent factors you should further research:
Future Outlook: What are well-informed industry analysts predicting for PHM’s future growth? Take a look at our free research report of analyst consensus for PHM’s outlook.
Dividend Income vs Capital Gains: Does PHM return gains to shareholders through reinvesting in itself and growing earnings, or redistribute a decent portion of earnings as dividends? Our historical dividend yield visualization quickly tells you what your can expect from PHM as an investment.
Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of PHM? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
