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PulteGroup (PHM) Q4 Earnings, Revenues Top; Margins Rise

PulteGroup Inc.' s PHM fourth-quarter 2016 adjusted earnings of 67 cents per share beat the Zacks Consensus Estimate of 58 cents by 15.5%. However, quarterly earnings increased 17.5% from the year-ago quarter's adjusted figure of 57 cents. Shares of PulteGroup gained over 2% in pre-market trading .

Earnings in the quarter under review were adjusted for 16 cents per share, related to insurance and tax benefits. Meanwhile, earnings in the fourth quarter of 2015 were adjusted for 7 cents owing to benefits from insurance and mortgage reserve reversals.

PulteGroup's total revenue of $2.49 billion surpassed the Zacks Consensus Estimate of $2.33 billion by 6.9%. Revenues were also up 20.9% year over year on an increase in the number of homes delivered.

Segment Details

The company conducts operations through two primary business segments - Homebuilding and Financial Services.

Homebuilding revenues rose 21.4% year over year to $2.44 billion. The company stated that overall housing demand remained positive. It believes that continued favorable trends in the economy, job growth, demographics and consumer confidence can more than offset the impact of modestly higher rates, allowing the housing recovery to continue at a steady pace.

Home sale revenues of $2.42 billion increased 21.6% year over year on increased home closings and average selling price. Land sale revenues of $15.4 million decreased 26.3% from $20.9 million a year ago.

The number of homes closed increased 9.4% year over year to 6,197. Home closings increased across all operating regions of the company - Southeast, Florida, Midwest, Texas and West - barring Northeast.

Average selling prices (ASP) of homes delivered was $391,000, up 11% year over year, driven by a shift in the mix of homes closed along with price increases realized by the company's national brands: Centex, Pulte Homes and Del Webb.

The company's backlog, which represents orders yet to be closed, was 7.422, up 10.7% year over year. Potential housing revenues from backlog increased 20% to $2.9 billion. Backlog value was driven by a 9% increase in average sales price of backlogs.

New home orders increased 14.8% year over year to 4,202 in the quarter. Home orders increased across all operating regions, including Northeast. Value of new orders increased 22% year over year to $1.7 billion.

Revenues from the Financial Services segment increased 24.8% year over year to $54.2 million. The segment generated pre-tax income of $25 million, lower than $29 million (including a $12 million-benefit relating to a reversal of mortgage repurchase reserves) in the prior-year quarter, driven by higher closing volumes in homebuilding operations and a fourth quarter capture rate of 82%.

Margins

Home sales' gross margin increased 130 basis points year over year to 24.8%, after changing the way commission expense is reported. The company reclassified internal and external sales commission expense from home sale cost of revenues to SG&A in order to be more consistent with its peers.

2016 Results

PulteGroup reported earnings per share of $1.76 in 2016 which increased 27.5% year over year and also managed to beat the Zacks Consensus Estimate of $1.59. The company reported net sales of $7.67 billion, up 28.3% year over year. The net sales also surpassed the Zacks Consensus Estimate of $7.51 billion.

The company ended the year with 726 active communities, which represent an increase of 17% over the comparable prior-year period.

Financials

As of Dec 31, 2016, cash and cash equivalents were $698.8 million, down from $754.2 million at 2015-end. During the fourth quarter, the company repurchased 13.2 million common shares for $252 million, or an average price of $19.07 per share.

PulteGroup, Inc. Price, Consensus and EPS Surprise

PulteGroup, Inc. Price, Consensus and EPS Surprise | PulteGroup, Inc. Quote

PulteGroup carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Peer Releases

D.R. Horton, Inc. DHI exhibited an impressive performance in the first quarter of fiscal 2017 , with earnings and revenues beating the Zacks Consensus Estimate by 17% and 6.8%, respectively.

KB Home KBH reported its fourth-quarter 2016 numbers wherein earnings surpassed analysts' expectations by 8.1% and revenues by 2%.

Lennar Corporation LEN beat expectations on both the counts for the fourth time in a row in the fourth quarter of fiscal 2016 .

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PulteGroup, Inc. (PHM): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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