PulteGroup Beats Despite Wider Losses
BLOOMFIELD HILLS, Mich. (
) --
PulteGroup
(PHM) - Get Report
beat quarterly expectations despite posting a wider year-over-year loss.
Stifel Nicolaus analyst Michael Widner maintained a hold rating on the stock, noting that "while we see long-term potential for the stock on a normalized earnings basis we expect price-to-book to dominate valuations in the near-term."
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The analyst had expected the homebuilder to swing to year-over-year profitability.
PulteGroup shares fell 6.4% ahead of midday Wednesday to trade at $7.57.
PulteGroup posted a loss of $995.1 million, or $2.63 per share, compared with a year-earlier loss of $361.4 million, or $1.15 per share, in the year-earlier period. Excluding $2.60 per share in impairment charges, adjusted losses were 3 cents per share, topping expectations for a loss of a nickel per share.
>>Homebuilder Stocks: Behind The Numbers
Widner was surprised by PulteGroup's goodwill impairment charges, a $655 million writedown related to its acquisition of
Centex
.
Revenue slid 2.8% year-over-year to $1.06 billion. Despite the decline, PulteGroup's top-line results also managed to beat analysts' consensus call for sales of $1.04 billion.
Unit closing volumes fell 3%, partially offset by a 5% uptick in average selling prices, to $365,000.
Net new-home orders declined 12% to 3,566 as industry conditions "remain challenging over the near term." PulteGroup's cancellation rate declined to 19.1% from 22.6% a year earlier. Backlog of 5,345 homes worth $1.4 billion was smaller than a backlog of 8,363 homes valued at $2.2 billion reported in the third quarter last year.
PulteGroup plans to cut selling, general and administrative costs by $100 million in 2011 in an attempt to deal with overall sluggishness in the homebuilding market.
Weyerhaeuser
(WY) - Get Report
beat top- and bottom-line expectations when it reported last week. The forest products company and homebuilder posted net quarterly earnings of $1.12 billion, or $3.50 per share, compared with break-even results in the year-earlier period. Net revenue jumped 17.7% to $1.66 billion.
>>Weyerhaeuser Beats on Paper Products
Excluding one-time items, adjusted earnings were 25 cents per share, better than the 10 cents per share analysts expected. Analysts typically exclude one-time items when forecasting earnings estimates. Stronger-than-expected results were attributed to increased demand in cellulose, a key material in papers and fibers.
Analysts from Barclays Capital reiterated an overweight rating on Weyerhaeuser shares following its earnings release, and raised their price target on the stock by $10 to $128. RBC Capital Markets also reiterated an outperform rating, and raised their price target by $3 to $103. Research firm Dahlman Rose initiated coverage of Weyerhaeuser earlier in October with a buy rating and $120 price target.
Industry peer
M.D.C. Holdings
(MDC) - Get Report
narrowed its quarterly losses and beat expectations, leading Widner to reiterate a hold rating on its shares based on "mixed valuation metrics and no near-term catalysts."
He noted that gross margins of 20.9% topped his expectations for 18%, offset by impairment charges and guidance for weaker fourth-quarter gross margins.
-- Written by Miriam Marcus Reimer in New York.
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