) third quarter adjusted earnings (excluding tax benefit) of 27
cents per share beat the Zacks Consensus Estimate of 20 cents by
35% and were significantly better than adjusted earnings of 11
cents in the prior-year quarter.
The company conducts its operations through two primary business
segments - Homebuilding and Financial Services. PulteGroup
reported total revenue of $1.30 billion in the third quarter, up
14% from the prior-year quarter attributable to solid
homebuilding revenues. Total revenues, however, missed the Zacks
Consensus Estimate of $1.40 billion.
A recovering homebuilding market combined with PulteGroup's cost
reduction and operating efficiency improvement initiatives led to
bottom-line beat in the quarter.
Quarter in Detail
Pulte's homebuilding revenues, derived from popular brands like
Pulte Homes, Centex and Del Webb, rose 13.5% to $1.26 billion,
driven by an increase in number of homes closed and average
selling prices. Home sales increased 11.8% to $1.23 billion while
land sales shot up 78% to $22.6 million in the quarter. Revenues
in the company's Financial Services scaled up 70.0% to $47.3
Home closings were up 5% year over year to 4,418 homes in the
reported quarter owing to increase in sales in most segments
excluding Northeast, Florida and Texas. The average sales price
of homes delivered stood at $279,000, up 5% year over year
attributable to a change in mix towards steeply priced move-up
homes, introduction of new communities and improving housing
New home orders were up 27% year over year to 4,544 homes in the
quarter, attributable to rising home demand in all the
regions. Most of the segments reported growth in new orders in
the quarter, although there was a 7% decline in the number of
communities. The value of new orders grew 43% year over year to
$1.3 billion in the quarter.
The boom in net order book was attributed to a stabilizing
recovery in the housing market. This was backed by low home
prices and moderating interest rates as renting became a more
expensive option luring buyers to new homes.
Quarter-end sales order backlog rose 49% to 7,686 homes as of
September 30, 2012 from 5,143 homes as of September 30, 2011. The
value of the backlog rose 60.7% to $2.25 billion as of September
30, 2012 from $1.40 billion as of September 30, 2011. The backlog
rose owing to significant net sales order increase.
Adjusted gross margins expanded 320 basis points over the
prior-year quarter and 130 basis points sequentially to 21.6%. It
was driven by pricing benefits, operating efficiency improvement
initiatives and a better mix of sales, particularly of move-up
LENNAR CORP -A (LEN): Free Stock Analysis
PULTE GROUP ONC (PHM): Free Stock Analysis
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On October 24, 2012, the company announced a tender offer of
outstanding senior notes worth $1 billion.
The company is seeing a definite improvement in demand in the
homebuilding sector and believes its cost reduction and operating
efficiency improvement plans will lead to profitability in 2012.
We are encouraged by Pulte's solid third quarter results and
bullish growth projection for the upcoming quarters, backed by
the gradually recovering homebuilding market. We believe that
homebuilders like Pulte and
), who have significant land positions, broad geographic and
product diversity, and better capital positions, are expected to
benefit the most as market conditions recover. However, the
housing recovery is uneven and not yet broad based. We would thus
prefer to remain on the sidelines until we witness a substantial
recovery in the overall housing market.
We currently have a Neutral recommendation on PulteGroup Inc. The
stock carries a Zacks #3 Rank (a short-term Hold rating).