Can PulteGroup (PHM) Pull Off A Surprise In Q1 Earnings?
Zacks Investment Research | Apr 20, 2017 11:22PM ET
PulteGroup, Inc. (NYSE:PHM) , engaged in homebuilding and financial services, is scheduled to report first-quarter 2017 results on Apr 25, before the opening bell.
Last quarter, the company’s earnings surpassed expectation by 15.52%. Also, PulteGroup surpassed estimates in three of the last four quarters, resulting in an average positive surprise of 13.49%.
Let’s see how things are shaping up prior to this announcement.
Factors to Consider
PulteGroup’s management is positive about the housing industry and believes that demand will increase at a slow and steady pace over the next several years, supported by improving economic conditions, job creation and affordable interest/mortgage rates.
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.
The company expects its previous land investment to position it well for consistent earnings growth. As revealed earlier, the company expects home sales gross margin of approximately 23.5% in the first quarter compared with 21.9% reported in the prior-year quarter.
Higher closing volumes and average selling price are expected to boost earnings in the to-be-reported quarter.
Pulte is also maximizing the value of its land assets by selling houses at higher prices and better margins, thereby using the resulting strong cash flow to invest in the business, pay off debt and systematically return to shareholders.
For the first quarter, the Zacks Consensus Estimate for earnings is pegged at 28 cents a share, reflecting an increase of 16.7% year over year, while the consensus for revenues is at $1.77 billion, implying 23.6% year-over-year growth.
Earnings Whispers
Our proven model does not conclusively show that PulteGroup is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Zacks Investment Research
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