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PulteGroup (PHM) to Report Q3 Earnings: What's in the Cards?

Zacks Equity Research

PulteGroup Inc. PHM is slated to report third-quarter 2019 results on Oct 22, before the opening bell.

In the last reported quarter, the company’s earnings and revenues surpassed the Zacks Consensus Estimate by 4.9% and 0.5%, respectively. Notably, it surpassed earnings estimates in each of the trailing 11 quarters.

This homebuilder’s second-quarter earnings and revenues decreased 3.4% each from the year-ago reported figure.

How are Estimates Faring?

Let’s take a look at the estimate revision trend in order to get a clear picture of what analysts are thinking about the company prior to the earnings release.

The Zacks Consensus Estimate for the quarter to be reported is currently pegged at 92 cents per share, remaining unchanged over the past 30 days. This indicates a decrease of 8.9% from the year-ago reported figure of $1.01 per share. Revenues are expected to be $2.6 billion, suggesting 1.7% year-over-year decline.

 

PulteGroup, Inc. Price and EPS Surprise

 

PulteGroup, Inc. Price and EPS Surprise
PulteGroup, Inc. Price and EPS Surprise

PulteGroup, Inc. price-eps-surprise | PulteGroup, Inc. Quote

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Factors to Consider

PulteGroup’s lower revenues and earnings, mainly due to the ongoing U.S. housing market uncertainties, are expected to get reflected in third-quarter 2019 results. Although declining mortgage rates and lower housing prices are expected to have increased traffic in the quarter, lower conversion of that traffic to sign purchase contracts is likely to have weighed on its revenues.

For the to-be-reported quarter, the company expects deliveries within 5,700-6,000 homes, indicating a decline from 6,031 reported in the year-ago period. Average selling price or ASP is projected between $425,000 and $430,000. The metric was $427,000 a year ago.

Overall, the consensus estimate for Homebuilding revenues (accounting for 98% of revenues) of $2.55 billion suggests a 1.9% year-over-year decrease. However, it is expected to register 4.7% higher revenues sequentially.

Meanwhile, higher construction material prices, and rising land and labor costs are expected to have weighed on its margins. PulteGroup expects homebuilding gross margin in the third quarter within 22.8-23.3%. The metric was 24% in the year-ago period and 23.1% in second-quarter 2019.

In a nutshell, lower revenues and margins are expected to have affected the company’s third-quarter earnings.

What the Zacks Model Says

Our proven model does not show that PulteGroup is likely to beat estimates in the quarter to be reported. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to deliver a positive surprise. This is not the case here, as you will see below.

Earnings ESP: PulteGroup has an Earnings ESP of 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate are currently pegged at 92 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: PulteGroup carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks Worth a Look

Here are some companies in the Zacks Construction sector, which according to our model have the right combination of elements to post an earnings beat in their respective quarters to be reported.

Meritage Corporation MTH has an Earnings ESP of +1.12% and a Zacks Rank #1.

Jacobs Engineering Group Inc. JEC has an Earnings ESP of +1.14% and holds a Zacks Rank #2.

Martin Marietta Materials, Inc. MLM has an Earnings ESP of +4.10% and carries a Zacks Rank #2.

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Martin Marietta Materials, Inc. (MLM) : Free Stock Analysis Report
 
Jacobs Engineering Group Inc. (JEC) : Free Stock Analysis Report
 
Meritage Corporation (MTH) : Free Stock Analysis Report
 
PulteGroup, Inc. (PHM) : Free Stock Analysis Report
 
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