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Earnings Jump at Pulte Homes

Updated from Oct. 26

Third-quarter profit soared at Pulte Homes (PHM), blowing past analysts' estimates, as revenue jumped from a year earlier due to strong closings in all of its geographic markets.

The homebuilder said income from continuing operations increased to $387.7 million, or $1.47 a share, from $259.1 million, or 99 cents a share. (The company earned $7.7 million, or 3 cents a share, in the latest quarter from discontinued operations.)

Revenue rose to $3.84 billion from $2.96 billion a year earlier. A Thomson First Call survey had expected the company to post earnings of $1.39 a share and revenue of $3.81 billion.

Pulte said revenue from domestic homebuilding settlements for the quarter increased 32% to $3.7 billion from $2.8 billion in the prior year. The number of unit settlements, or closings, increased 21% to 11,747 homes from 9,669 settlements last year, while average selling prices rose 9% to $317,000 per home. The higher average sales price reflected increases in selling prices and a favorable change in the mix of product delivered, the company said.

Domestic net new-home orders rose 19% from a year earlier. Pulte's backlog as of Sept. 30 was valued at $8 billion (23,666 homes), up from $6.4 billion (20,400 homes) last year.

On a conference call Thursday morning, management said new orders were strong across the country but particularly in Texas, especially in San Antonio and Austin. Pulte's Central region, which includes Texas, provided the best order growth in the country for the company, jumping 44% for the quarter over last year.

Pulte raised its full-year earnings forecast to $5.35 to $5.45 a share from a prior outlook of $5 to $5.25. The new projection suggests fourth-quarter EPS of $1.90 to $2. Analysts are currently expecting the company to post earnings of $1.94 a share for the quarter.

On the conference call, management said it expects earnings per share to total $6 to $6.25 for 2006, assuming overall macroeconomic conditions remain moderately comparable to this year. The guidance assumes the average selling price of home closings will rise 4% to 5% next year based on a shift to a higher-priced product mix. The company also assumes flat price appreciation for its homes next year.

Analysts currently expect Pulte to post earnings of $6.04 a share for 2006.

Pulte shares recently dropped $1.20, or 3.3%, to $35.20.

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