Why PulteGroup (PHM) Is Gaining Today

NEW YORK (TheStreet) -- PulteGroup (PHM) was gaining 4.3% to $20.62 on Friday following an earnings report that beat analyst expectations.

The homebuilder reported earnings of 57 cents a share, while analysts surveyed by Thomson Reuters estimated earnings of just 44 cents a share. PulteGroup reported revenue of $1.66 million for the quarter, compared to analyst estimates of $1.68 million.

The company saw a 9% increase of home sale revenue for the quarter thanks to raised selling prices. PulteGroup has slowed its pace of building houses, relying on the higher prices of fewer houses on the market to drive revenue.

Following the earnings report analyst firm Raymond James upgraded the company to "outperform" from "market perform," setting a price target of $23.

TheStreet Ratings team rates PULTEGROUP INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate PULTEGROUP INC (PHM) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, robust revenue growth, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • PULTEGROUP INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. 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 ($6.61 versus $0.53).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Household Durables industry. The net income increased by 1856.5% when compared to the same quarter one year prior, rising from $116.63 million to $2,281.88 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 29.8%. Since the same quarter one year prior, revenues rose by 21.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The current debt-to-equity ratio, 0.48, is low and is below the industry average, implying that there has been successful management of debt levels.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Household Durables industry and the overall market, PULTEGROUP INC's return on equity significantly exceeds that of both the industry average and the S&P 500.

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