NEW YORK (TheStreet) -- Shares of PulteGroup (PHM) are up by 0.40% to $20.33 in late morning trading on Tuesday, as some home builder stocks rise following the release of data showing new single family home sales rose to a seven year high in May.
On Tuesday, the Commerce Department said sales grew by 2.2% to a seasonally adjusted annual rate of 546,000 units, the highest level since February 2008, Reuters reports.
Economists polled by Reuters had forecast for a 525,000 unit pace for May.
On Monday, data released by the National Association of Realtors showed home re-sales in May jumped to a five and a half year high.
PulteGroup is an Atlanta-based home builder that also offers customers mortgage banking options and title operations.
So far today, 2.44 million shares of PulteGroup have exchanged hands as compared to its average daily volume of 5.44 million shares
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 some important positives, 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, reasonable valuation levels and increase in stock price during the past year. 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. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- You can view the full analysis from the report here: PHM Ratings Report