What's in the Cards for PulteGroup's (PHM) Q1 Earnings?
PulteGroup Inc. PHM is scheduled to report first-quarter 2022 results on Apr 28, before the opening bell.
In the last reported quarter, the company’s earnings and revenues topped the Zacks Consensus Estimate by 9.6% and 4.7%, respectively. Earnings and revenues increased 64.1% and 36.5% on a year-over-year basis, respectively.
It is to be noted that PHM surpassed earnings estimates in 19 of the trailing 21 quarters.
Trend in Estimate Revision
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings has remained unchanged at $1.71 per share over the past 60 days. Nonetheless, the estimated figure indicates a 33.6% increase from the year-ago earnings of $1.28 per share. Also, the consensus mark for revenues is $3.06 billion, suggesting 11.9% year-over-year growth.
PulteGroup, Inc. Price and EPS Surprise
PulteGroup, Inc. price-eps-surprise | PulteGroup, Inc. Quote
Factors to Note
The U.S. housing market has been riding high since the onset of the pandemic (albeit at a slower pace on supply chain challenges) buoyed by the rising trend of work from home owing to the coronavirus outbreak. This has been prompting many families to purchase a house, thereby boosting demand. Also, PulteGroup has been reaping benefits from the successful execution of initiatives to boost profitability, with a focus on entry-level homes. PulteGroup’s earnings and revenues are expected to have increased in the first quarter, given a prudent land investment strategy, focus on entry-level buyers along with a positive housing market trend.
Yet, unprecedented supply chain challenges and labor shortages have been creating hurdles for builders to fulfill orders and deliveries, thereby impacting revenues to some extent.
PulteGroup expects closings of 5,600-6,000 homes for the first quarter, indicating a decline from 6,044 homes delivered a year ago. It expects a higher average selling price or ASP for the quarter in the range of $500,000-$510,000, suggesting an increase from $430,000 in the year-ago period.
Overall, the Zacks Consensus Estimate for Homebuilding revenues of $2.96 billion suggests an increase from $2.62 billion a year ago, courtesy of higher ASP.
From the margin perspective, input cost inflation and high costs associated with labor and transportation are expected to have weighed on margins to some extent. That said, higher leverage owing to solid demand across each of the buyer groups is expected to have mitigated the risks. As such, given these cost price dynamics, the company expects homebuilding gross margins to expand to 28.5-29%% for first-quarter 2022 from 25.5% reported in the year-ago period.
SG&A expenses (as a percentage of home sales revenues) for the quarter are expected in the 10.7-10.9% range. The figure was the same a year ago.
Overall, higher sales and prices along with improved operating leverage are expected to have benefited PulteGroup’s earnings and revenues in the first quarter amid continuous supply chain woes.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for PulteGroup for the quarter to be reported. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here, as you will see below.
Earnings ESP: PHM has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: It currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Stocks With Favorable Combination
Here are some companies in the Zacks Construction sector, which according to our model have the right combination of elements to post an earnings beat in their respective quarters to be reported.
United Rentals, Inc. URI has an Earnings ESP of +10.11% and carries a Zacks Rank #3.
URI’s earnings topped the consensus mark in two of the last four quarters but missed on the other two occasions, with the average surprise being 2.9%.
PotlatchDeltic Corporation PCH has an Earnings ESP of +7.24% and holds a Zacks Rank #2.
PCH’s earnings topped the consensus mark in three of the last four quarters, with the average being 6.4%.
KBR, Inc. KBR has an Earnings ESP of +6.64% and a Zacks Rank #3.
KBR’s earnings topped the consensus mark in the last four quarters, with the average being 10.4%.
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PulteGroup, Inc. (PHM) : Free Stock Analysis Report
KBR, Inc. (KBR) : Free Stock Analysis Report
Potlatch Corporation (PCH) : Free Stock Analysis Report
United Rentals, Inc. (URI) : Free Stock Analysis Report
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