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Trade-Ideas: PulteGroup (PHM) Is Today's "Barbarian At The Gate" Stock

Stock quotes in this article: PHM

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified PulteGroup ( PHM) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified PulteGroup as such a stock due to the following factors:

  • PHM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $150.5 million.
  • PHM has traded 13.2 million shares today.
  • PHM traded in a range 206.6% of the normal price range with a price range of $1.24.
  • PHM traded above its daily resistance level (quality: 33 days, meaning that the stock is crossing a resistance level set by the last 33 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock s movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in PHM with the Ticky from Trade-Ideas. See the FREE profile for PHM NOW at Trade-Ideas

More details on PHM:

PulteGroup, Inc., through its subsidiaries, engages in homebuilding and financial services businesses primarily in the United States. The stock currently has a dividend yield of 1.3%. PHM has a PE ratio of 20.1. Currently there are 5 analysts that rate PulteGroup a buy, no analysts rate it a sell, and 9 rate it a hold.

The average volume for PulteGroup has been 10.9 million shares per day over the past 30 days. PulteGroup has a market cap of $5.9 billion and is part of the industrial goods sector and materials & construction industry. The stock has a beta of 2.13 and a short float of 5.9% with 2.24 days to cover. Shares are down 16% year to date as of the close of trading on Friday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates PulteGroup as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, weak operating cash flow and poor profit margins.

Highlights from the ratings report include:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 20.9%. Since the same quarter one year prior, revenues rose by 19.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.92, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels.
  • PULTEGROUP INC's earnings per share declined by 18.2% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, PULTEGROUP INC turned its bottom line around by earning $0.53 versus -$0.55 in the prior year. This year, the market expects an improvement in earnings ($1.08 versus $0.53).
  • Net operating cash flow has decreased to $64.45 million or 33.45% when compared to the same quarter last year. Despite a decrease in cash flow of 33.45%, PULTEGROUP INC is still significantly exceeding the industry average of -342.12%.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Household Durables industry. The net income has decreased by 14.2% when compared to the same quarter one year ago, dropping from $42.44 million to $36.42 million.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

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