NEW YORK (TheStreet) --Shares of PulteGroup (PHM) are up by 1.06% to $19.48 in mid-afternoon trading on Monday, as the home builder sector gets a boost from the rise in home builder confidence and from the announcement that Ryland (RYL) and Standard Specific (SPF) are merging.
The combination of the two companies will create the fourth largest home builder in the U.S.
The National Association of Home Builders/Wells Fargo data showed confidence among home builders spiked by five points to 59 in June, a nine-month high, MarketWatch reports.
Economists were expecting the confidence gauge to show a reading of 55.
Readings above the 50 mark indicate that home builders are encouraged by current sales trends.
PulteGroup is an Atlanta, GA.-based company with a focus on home design, construction, and sales. The company also offers mortgage banking services.
Separately, 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 revenue growth, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. We feel its strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Despite its growing revenue, the company underperformed as compared with the industry average of 7.6%. Since the same quarter one year prior, revenues slightly increased by 1.3%. 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 current debt-to-equity ratio, 0.40, is low and is below the industry average, implying that there has been successful management of debt levels.
- PULTEGROUP INC's earnings per share declined by 21.1% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, PULTEGROUP INC reported lower earnings of $1.25 versus $6.74 in the prior year. This year, the market expects an improvement in earnings ($1.30 versus $1.25).
- In its most recent trading session, PHM has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
- You can view the full analysis from the report here: PHM Ratings Report