) reached a 52-week high of $24.26 on Tuesday, May 14 gaining
momentum from solid first-quarter 2013 results announced on Apr
25. Moreover, this homebuilder has a bright outlook for the rest
of the year with the improving housing fundamentals. The closing
price of the shares on May 14 was $24.25, yielding a superb
year-to-date return of 30.4%.
Share Price Drivers
Estimates have been rising for Pulteafter it reported strong
first-quarter 2013 results beating the Zacks Consensus Estimate
for both revenues and earnings.
Pulte's adjusted net earnings of 21 cents per share beat the
Zacks Consensus Estimate by 31.3%. Earnings were also
significantly better than the prior-year quarter loss of 3 cents
per share. The earnings upsurge was driven by strong homebuilding
revenues, gross margin expansion and solid operating
Homebuilding revenues climbed 32.9% year over year driven by
better pricing power and volume growth amid improving housing
market conditions. Homes sold, closed and in backlog, all
increased in the quarter compared to the year-ago quarter. Gross
margins improved year-over-year driven by higher pricing and
better mix of sales. Moreover, the continued fall in overhead
costs is pulling down the company's Selling, General and
Administrative (SG&A) expenses substantially and subsequently
boosting operating margins.
We believe that homebuilders like Pulte, who have significant
land positions, broad geographic and product diversity, and
better capital positions, are expected to take maximum advantage
of the housing recovery. Management believes that 2013 will be a
better year for the housing industry than 2012.
The robust quarterly results led to an upward bias in estimate
revisions. In fact, the Zacks Consensus Estimate for 2013 and
2014 increased a respective 18.2% and 3.0% to $1.30 and $1.39 per
share over the last 30 days. Moreover, Pulte has beaten the Zacks
Consensus Estimate for the past four quarters with an average
earnings surprise of an impressive 59%.
Other Stocks to Consider
Other stocks in the homebuilding sector that are performing
well and deserve a mention include
Ryland Group Inc.
Meritage Homes Corporation
D.R. Horton, Inc.
), all carrying a Zacks Rank #1 (Strong Buy).
D R HORTON INC (DHI): Free Stock Analysis
MERITAGE HOMES (MTH): Free Stock Analysis
PULTE GROUP ONC (PHM): Free Stock Analysis
RYLAND GRP INC (RYL): Free Stock Analysis
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