PulteGroup IncPHM reported impressive second-quarter 2018 results, with earnings and revenues beating the Zacks Consensus Estimate.
The company's earnings per share came in at 89 cents, beating the consensus mark of 74 cents. The bottom line also improved 89.4% on a year-over-year basis. Results benefited from higher demand, courtesy of positive U.S. housing market dynamics backed by an improving economy and job market.
Total revenues of $2.57 billion surpassed the consensus mark of $2.37 billion and increased 27.2% on a year-over-year basis.
PulteGroup primarily operates through two business segments - Homebuilding and Financial Services.
Revenues at the Homebuilding segment were up 27.9% year over year to $2.52 billion.
Home sale revenues of $2.5 billion rose 25% year over year on increased deliveries and average selling price. Land sale revenues totaled $66.9 million compared with $8.9 million a year ago.
The number of homes closed increased 13.8% year over year to 5,741. Notably, home closings were up across all operating regions of the company - Florida, Northeast, Southeast, Texas and West - barring Midwest. Average selling price (ASP) of homes delivered was $427,000, up 10% year over year.
The company's backlog, which represents orders yet to be closed, was 11,845, up 11% year over year. Potential housing revenues from backlog increased 17% to $5.2 billion. Backlog value was driven by 5% increase in ASP of backlogs.
New home orders fell 1% year over year to 6,341 in the quarter. Home orders were down across all operating regions, barring Northeast and Florida. Value of new orders increased 3% year over year to $2.7 billion.
Gross margin expanded 60 basis points (bps) year over year to 24%. Adjusted operating margin increased 180 bps to 13.2%.
Adjusted SG&A expenses, as percentage of home sale revenues, were 10.8%, down 120 bps from the prior-year quarter.
Revenues from the Financial Services segment increased 10% year over year to $45.9 million. Financial services benefitted from higher homebuilder closing volumes and an increase in the average loan size. The segment generated pre-tax income of $21 million, up 9% year over year. Mortgage capture rate in the quarter was 76% compared with 79% in the year-ago quarter.
PulteGroup, Inc. Price, Consensus and EPS Surprise
As of Jun 30, 2018, cash and cash equivalents were $367.1 million, up from $272.7 million at the end of 2017.
In the reported quarter, PulteGroup repurchased 1.7 million common shares for $53 million, or an average price of $30.07 per share.
PulteGroup has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .
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