U.S. markets open in 6 hours 12 minutes
  • S&P Futures

    4,170.25
    -6.00 (-0.14%)
     
  • Dow Futures

    33,999.00
    -82.00 (-0.24%)
     
  • Nasdaq Futures

    14,033.75
    +4.25 (+0.03%)
     
  • Russell 2000 Futures

    2,250.20
    -8.80 (-0.39%)
     
  • Crude Oil

    62.94
    -0.19 (-0.30%)
     
  • Gold

    1,779.50
    -0.70 (-0.04%)
     
  • Silver

    25.93
    -0.17 (-0.65%)
     
  • EUR/USD

    1.1983
    +0.0003 (+0.02%)
     
  • 10-Yr Bond

    1.5730
    0.0000 (0.00%)
     
  • Vix

    16.25
    -0.32 (-1.93%)
     
  • GBP/USD

    1.3843
    +0.0003 (+0.02%)
     
  • USD/JPY

    108.4700
    -0.3130 (-0.29%)
     
  • BTC-USD

    57,201.70
    -205.85 (-0.36%)
     
  • CMC Crypto 200

    1,301.97
    -89.74 (-6.45%)
     
  • FTSE 100

    7,015.39
    -4.14 (-0.06%)
     
  • Nikkei 225

    29,685.37
    +2.00 (+0.01%)
     

Why PulteGroup, Inc. (NYSE:PHM) Could Be Worth Watching

  • Oops!
    Something went wrong.
    Please try again later.
Simply Wall St
·3 min read
  • Oops!
    Something went wrong.
    Please try again later.

Today we're going to take a look at the well-established PulteGroup, Inc. (NYSE:PHM). The company's stock saw a double-digit share price rise of over 10% in the past couple of months on the NYSE. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Let’s examine PulteGroup’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for PulteGroup

Is PulteGroup still cheap?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 7.24% above my intrinsic value, which means if you buy PulteGroup today, you’d be paying a relatively fair price for it. And if you believe that the stock is really worth $42.06, there’s only an insignificant downside when the price falls to its real value. Although, there may be an opportunity to buy in the future. This is because PulteGroup’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

Can we expect growth from PulteGroup?

earnings-and-revenue-growth
earnings-and-revenue-growth

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. PulteGroup's earnings over the next few years are expected to increase by 30%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? It seems like the market has already priced in PHM’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping tabs on PHM, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. At Simply Wall St, we found 2 warning signs for PulteGroup and we think they deserve your attention.

If you are no longer interested in PulteGroup, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.