PulteGroup (NYSE:PHM) Stock, Quote.Headers.trade-ideas

PulteGroup

PulteGroup Inc is a homebuilder in the United States. The company mainly builds single-family detached homes, and offers products to entry-level, move-up, and active-adult buyers. It also offers homebuyers mortgage financing, title, and insurance agency services through its financial services segment.

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Homebuilder stocks are surging ahead of Fed&#39;s rate cut decision. Lennar and PulteGroup reach 52-week highs as investors bet on boost for housing market.

Homebuilder Giants Lennar, PulteGroup Hit New 52-Week Highs As Rate Cut Closes In

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Single-family housing starts last month came in at an annualized rate of 992,000 units, up 15.8% from a revised figure of 857,000 for July.

Single-Family Housing Starts Are Up As Mortgage Rates Decline, Fed Eyes Lower Rates

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Homebuilder and building product stocks may rise with potential Fed rate cut, as seen in past. BoA predicts higher valuations and outperformance.

Homebuilder Stocks Outperform Ahead Of Potential Rate Cuts — But What&#39;s Next?

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Homebuilder stocks are hitting new highs as anticipation builds ahead of the Federal Reserve&#8217;s upcoming rate cut decision. Both Lennar Corp (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/LEN#NYSE">LEN</a>) and PulteGroup, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/PHM#NYSE">PHM</a>) surged to 52-week highs on Sept. 18, with Lennar reaching $190.12 and <a href="https://www.benzinga.com/quote/LEN/news">PulteGroup hitting $141.43</a>.
The rally comes as investors bet that the Fed&#8217;s expected rate cut could further boost the already resurgent housing market.
<h1 class="wp-block-heading">Lower Rates To Benefit Home Builder Stocks</h1>
A note from Bank of America Securities highlights that the rally in homebuilder stocks has been underway since early July, coinciding with a drop in 30-year mortgage rates from 7% to 6.2%. 
&#8220;Lower rates would benefit home demand,&#8221; the note added, suggesting that a Federal Reserve cut of 25 to 50 basis points would add fuel to the fire for the housing sector.
Read Also: <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/09/40908889/homebuilder-stocks-outperform-ahead-of-potential-rate-cuts-but-whats-next">Homebuilder Stocks Outperform Ahead Of Potential Rate Cuts — But What&#8217;s Next?</a>
<h1 class="wp-block-heading">Lennar&#8217;s Cash Flow Yield In Focus As It Reports Q3 Earnings</h1>
Lennar, up 26.78% year to date and nearly 60% over the past year, has been a standout performer, benefiting from strong demand and improved earnings multiples. The company is expected to release its third-quarter earnings tomorrow (Thursday), which could provide further insights into its performance.
Bryn Talkington of Requisite Capital Management also pointed to Lennar's impressive free cash flow yield of 11%, making it an attractive play for investors seeking value amid the rate cut frenzy.
<h1 class="wp-block-heading">PulteGroup&#8217;s Margins Continue To Impress Investors</h1>
PulteGroup, up a whopping 82.46% over the past year, followed a similar path. The company, which develops single-family homes under well-known brands such as Pulte Homes and Centex, continues to enjoy top-of-the-line margins despite industry headwinds like inflation and a soft labor market.
Analysts believe the Fed's expected rate cut will temporarily relieve the housing affordability crisis, though long-term challenges remain.
Lennar and PulteGroup are positioned to keep riding the wave as the Fed&#8217;s decision looms. Investors eyeing exposure to the housing sector may want to watch closely.
Read Next: 
<ul>
<li><a href="https://www.benzinga.com/top-stories/24/09/40923657/single-family-housing-starts-are-up-as-mortgage-rates-decline-fed-eyes-lower-rates">Single-Family Housing Starts Are Up As Mortgage Rates Decline, Fed Eyes Lower Rates</a></li>
</ul>

New construction on single-family homes in the U.S. <a href="https://www.benzinga.com/news/23/06/32926608/us-housing-starts-skyrocket-to-highest-level-since-2016-sign-of-strong-market-optimism-among-builder">jumped in August</a> as mortgage rates trend downward and the Federal Reserve is expected to cut rates on Wednesday for the first time in four years.
Single-family housing starts last month came in at an annualized rate of 992,000 units, up 15.8% from a revised figure of 857,000 for July, according to Commerce Department data released on Wednesday.
Starts for all privately-owned housing in August totaled an annualized rate of 1.356 million units, up 9.6% from the July revised estimate of 1.237 million and up 3.9% from the August 2023 rate of 1.305 million.
Single-family housing completions reached an annualized rate of 1.029 million in August, registering a 5.6% decline from July&#8217;s revised rate of 1.09 million.
Completions for all privately-owned homes in August were at a seasonally adjusted annual rate of 1.788 million, up 9.2% from the July revised estimate of 1.637 million and 30.2% above the July 2023 rate of 1.373 million.
Read Also: <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/03/37845734/housing-starts-rebound-lift-homebuilder-stocks-sign-of-economic-resilience">Housing Starts Rebound, Lift Homebuilder Stocks: Sign Of Economic Resilience</a>
Building permits also rose last month, Commerce Department data showed.
Single-family authorizations in August were at a rate of 967,000, up 2.8% from the revised July figure of 941,000.
Privately-owned housing units authorized by building permits in August were at a seasonally adjusted annual rate of 1,475,000. That&#8217;s up 4.9% from the July revised rate of 1.406 million but below the August 2023 rate of 1.578 million.
The average rate for <a href="https://www.benzinga.com/news/24/09/40921345/mortgage-rates-drop-to-2-year-low-refinancing-hits-fastest-pace-since-2022-rocket-lendingtree-among">30-year mortgages</a> fell 14 basis points in the week ended Sept. 13 to 6.15%, marking the lowest rate since September 2022, according to the Mortgage Bankers Association.
The Federal Reserve is <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/09/40921827/fed-decision-is-here-5-things-investors-need-to-know-ahead-of-wednesdays-pivotal-in">expected to lower</a> its key interest rate ranging from 5% to 5.25% on Wednesday by either 25 or 50 basis points, signifying its first rate decline in four years.
Price Action: Homebuilders slid into Wednesday&#8217;s mid-day trading.
<ul>
<li>D.R. Horton, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DHI#NYSE">DHI</a>) slipped 0.86% to $193.67 </li>
<li>Pulte Group (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/PHM#NYSE">PHM</a>) declined 0.41% to $139.88</li>
<li>NVR, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/NVR#NYSE">NVR</a>) went down 0.34% to $9,542.99</li>
</ul>
Exchange-traded funds that hold homebuilder stocks showed gains and losses.
<ul>
<li>IShares U.S. Home Construction ETF (BATS:<a class="ticker" href="https://www.benzinga.com/stock/ITB#BATS">ITB</a>) declined 0.57%</li>
<li>Direxion Daily Homebuilders &amp; Supplies Bull 3X Shares (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/NAIL#NYSE">NAIL</a>) fell 1.8%</li>
<li>Pacer US Cash Cows Growth ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BUL#NYSE">BUL</a>) gained 0.2%</li>
</ul>
Read Now:
<ul>
<li>&#8216;<a href="https://www.benzinga.com/real-estate/24/08/40666981/the-time-has-come-to-adjust-cheaper-mortgage-rates-could-be-just-weeks-away-but-it-all-hinges-on-thi">The Time Has Come to Adjust&#8217; — Cheaper Mortgage Rates Could Be Just Weeks Away, But It All Hinges On This Data</a></li>
</ul>
Image: Shutterstock

Homebuilder and building product stocks <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/09/40882613/builders-first-source-other-homebuilder-stocks-rise-with-catalysts-such-as-mortgage">could see an upward trend</a> if the Federal Reserve cuts the key interest rate on Wednesday, based on historical performance, according to a major U.S. bank.
The Fed is expected to lower rates by either 25 or 50 basis points, marking the first change since July 2023 when it raised the rate to a range of 5% to 5.25%.
&#8220;Builders and building product stocks have outperformed in anticipation of rate cuts,&#8221; BofA Securities said in a note on Tuesday.
&#8220;Lower rates would benefit home demand.&#8221;
Homebuilder and building product stocks have rallied since early July as 30-year mortgage rates have fallen from 7% to roughly 6.2%, boosting new home demand and spending on home improvements, BofA said.
&#8220;In our view, the stock performance has been stronger than the improvement in underlying fundamentals as investors look through near-term weakness to a 2025 recovery fueled by lower mortgage rates and pent-up demand,&#8221; the note stated.
Read Also: <a href="https://www.benzinga.com/markets/equities/24/07/39988310/homebuilder-stocks-rally-to-record-highs-on-rate-cut-frenzy-but-housing-sales-still-struggle">Homebuilder Stocks Rally To Record Highs On Rate-Cut Frenzy But Housing Sales Still Struggle</a>
&#8220;Housing sector outperformance ahead of rate cuts is consistent with prior cycles, but the magnitude and valuations are higher this time around. Stock performance following the first cut is more mixed although usually positive for homebuilders.&#8221;
BofA noted that homebuilders outperformed the S&amp;P 500 in the three months before three of the last five initial rate cuts, and building products outperformed in four of the last five.
In the last three months, homebuilder stocks have gone up 26% and building product shares have risen 13%, compared to the S&amp;P 500&#8217;s 2% uptick over the same period, BofA said.
&#8220;Assuming the Fed starts to cut rates in September, homebuilder and building product stocks will be trading at a higher valuation than going into any of the last five periods when the Fed started to cut.&#8221;
BofA also pointed out that homebuilders and building products typically underperform the S&amp;P 500 ahead of a recession but outperform it during and after a recession.
Price Action: Homebuilder stocks traded higher on Tuesday.
<ul>
<li>Pulte Group, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/PHM#NYSE">PHM</a>) rose 0.04% to $140.46.</li>
<li>D.R. Horton, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DHI#NYSE">DHI</a>) was up 0.3% to $195.37.</li>
<li>Lennar Corporation (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/LEN#NYSE">LEN</a>) gained 1.1% to $189.36.</li>
</ul>
Building products also saw gains and losses.
<ul>
<li>Antelope Enterprise Holdings Ltd. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AEHL#NASDAQ">AEHL</a>) rose 2.94% to $1.05.</li>
<li>Interface, Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/TILE#NASDAQ">TILE</a>) dropped 1.37% to $18.76.</li>
<li>Technoglass Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/TGLS#NYSE">TGLS</a>) went up 1.12% to $67.51.</li>
</ul>
The S&amp;P 500, which is tracked by SPDR S&amp;P 500 ETF Trust (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>), was up 0.02% to 5,634.58.
Read Now:
<ul>
<li><a href="https://www.benzinga.com/news/earnings/24/08/40474111/toll-brothers-q3-earnings-revenue-beat-eps-beat-homes-delivered-up-11-backlog-down-10-momentum-into">Toll Brothers Q3 Earnings: Revenue Beat, EPS Beat, Homes Delivered Up 11%, Backlog Down 10%, Momentum Into August And More</a></li>
</ul>
Image created using artificial intelligence via Midjourney.

Homebuilder Stocks Outperform Ahead Of Potential Rate Cuts — But What's Next?

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Shares of companies within the broader consumer discretionary sector are trading higher following better-than-expected consumer sentiment data. Strong earnings from RH and anticipated rate cuts may be lifting the sector.

PulteGroup (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/PHM#NYSE">PHM</a>) has outperformed the market over the past 10 years by 10.83% on an annualized basis producing an average annual return of 21.36%. Currently, PulteGroup has a market capitalization of $27.31 billion. 
Buying $100 In PHM: If an investor had bought $100 of PHM stock 10 years ago, it would be worth $692.93 today based on a price of $131.60 for PHM at the time of writing.
<h3>PulteGroup's Performance Over Last 10 Years</h3>
<img src="https://www.benzinga.com/files/images/story/2024/1725978623_0.png" alt="comp_fig" />
Finally -- what's the point of all this? The key insight to take from this article is to note how much of a difference compounded returns can make in your cash growth over a period of time.
This article was generated by Benzinga's automated content engine and reviewed by an editor.

$100 Invested In This Stock 10 Years Ago Would Be Worth $700 Today

PulteGroup (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/PHM#NYSE">PHM</a>) has outperformed the market over the past 10 years by 10.88% on an annualized basis producing an average annual return of 21.72%. Currently, PulteGroup has a market capitalization of $28.06 billion. 
Buying $1000 In PHM: If an investor had bought $1000 of PHM stock 10 years ago, it would be worth $7,136.51 today based on a price of $135.22 for PHM at the time of writing.
<h3>PulteGroup's Performance Over Last 10 Years</h3>
<img src="https://www.benzinga.com/files/images/story/2024/1724693411_0.png" alt="comp_fig" />
Finally -- what's the point of all this? The key insight to take from this article is to note how much of a difference compounded returns can make in your cash growth over a period of time.
This article was generated by Benzinga's automated content engine and reviewed by an editor.

$1000 Invested In PulteGroup 10 Years Ago Would Be Worth This Much Today

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Shares of household durable companies are trading higher following strong New Home Sales economic data for July. Also, the sector may be moving in sympathy with the market after Fed Chair Powell offered an optimistic U.S. economic outlook and indicated future rate cuts.

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Shares of homebuilders are trading higher in sympathy with Toll Brothers, which reported better-than-expected Q3 financial results and issued guidance above estimates.

Wedbush analyst Jay McCanless reiterates PulteGroup (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/PHM#NYSE">PHM</a>) with a Neutral and maintains $115 price target.

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Wedbush Reiterates Neutral on PulteGroup, Maintains $115 Price Target

After a rocky start to the month that led to a global market rout, two major inflation data seemed to have steadied the ship as the broader equity markets inched closer to all-time highs reached in mid-July. While the producer price index (a measure of wholesale prices) was up 0.1% last month, the consumer price index (a broad-based measure of prices for goods and services) increased 0.2%. This put the 12-month inflation rate at 2.9% &mdash; the lowest since March 2021.
While the data gave an uncertain market some direction after the erratic movement last week, it also portrayed the resilience of the economy. This, in turn, led to optimism about a possible rate cut by the Federal Reserve next month, triggering an uptrend for the stocks. With a better-than-expected 2.8% annualized GDP growth in the second quarter and solid labor market conditions, it appeared that the economy was back on the growth track, cooling recessionary fears.
As investors employ a wait-and-see approach in a classic example of &quot;backing and filling&quot; in the market, they can benefit from &quot;cash cow&quot; stocks that garner higher returns. However, identifying cash-rich stocks alone does not make for a solid investment proposition unless it is backed by attractive efficiency ratios like return on equity (ROE). A high ROE ensures that the company is reinvesting cash at a high rate of return. Upbound Group, Inc. (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/upbd#NASDAQ">UPBD</a>), The AES Corporation (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/aes#NYSE">AES</a>), Arch Capital Group Ltd. (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/acgl#NASDAQ">ACGL</a>), PulteGroup, Inc. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/phm#NYSE">PHM</a>) and Banco de Chile (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/bch#NYSE">BCH</a>) are some of the stocks with high ROE to profit from.
<h3>ROE: A Key Metric</h3>
ROE = Net Income/Shareholders&#39; Equity
ROE helps investors distinguish profit-generating companies from profit burners and is useful in determining the financial health of a company. In other words, this financial metric enables investors to identify companies that diligently deploy cash for higher returns.
Moreover, ROE is often used to compare the profitability of a company with other firms in the industry &mdash; the higher, the better. It measures how well a company is multiplying its profits without investing new equity capital and portrays management&#39;s efficiency in rewarding shareholders with attractive risk-adjusted returns.
<h3>Screening Parameters</h3>
In order to shortlist stocks that are cash-rich with high ROE, we have added Cash Flow greater than $1 billion and ROE greater than X-Industry as our primary screening parameters. In addition, we have taken a few other criteria into consideration to arrive at a winning strategy.
Price/Cash Flow lesser than X-Industry: This metric measures how much investors pay for $1 of free cash flow. A lower ratio indicates that investors need to pay less for a better cash flow-generating stock.
Return on Assets (ROA) greater than X-Industry: This metric determines how much profit a company earns for every dollar of asset, which includes cash, accounts receivable, property, equipment, inventory and furniture. The higher the ROA, the better it is for the company.
5-Year EPS Historical Growth greater than X-Industry: This criterion indicates that continued earnings momentum has translated into solid cash strength.
Zacks Rank less than or equal to 2: Zacks Rank #1 (Strong Buy) or 2 (Buy) stocks are known to outperform irrespective of the market environment.
Here are five of the 11 stocks that qualified the screening:
Upbound Group: Headquartered in Plano, TX, Upbound Group (formerly Rent-A-Center, Inc.) is a leading lease-to-own provider with operations in the United States, Puerto Rico and Mexico. The company provides services to a large portion of consumers by providing them access and the opportunity to obtain ownership of high-quality, durable products under a flexible lease purchase agreement with no long-term debt obligation.
The company delivered a trailing four-quarter earnings surprise of 3.8%, on average. It has a VGM Score of B. Upbound Group carries a Zacks Rank #2.
AES: Arlington, VA-based AES is a global power company. Its businesses are spread across four continents in 14 countries. The company has four Strategic Business Units located in the United States and other regions across the globe. AES remains one of the forerunners in the utility industry&#39;s transition to clean energy by investing in sustainable growth and innovative solutions while delivering superior results.
It delivered a trailing four-quarter earnings surprise of 19.2%, on average. AES carries a Zacks Rank #2.
Arch Capital: Headquartered in Pembroke, Bermuda, Arch Capital offers insurance, reinsurance and mortgage insurance across the world. It provides a wide range of products and services, which include primary and excess casualty coverages, professional indemnity, workers&#39; compensation and umbrella liability and employers&#39; liability insurance coverages. The company offers a full range of property, casualty and mortgage insurance and reinsurance lines while maintaining a focus on writing specialty lines of insurance and reinsurance.
It has a long-term earnings growth expectation of 6.1%. It delivered a trailing four-quarter earnings surprise of 28.9%, on average. It has a VGM Score of B. Arch Capital carries a Zacks Rank #2.
PulteGroup: Based in Atlanta, GA, PulteGroup engages in homebuilding and financial services businesses, primarily in the United States. The company conducts operations through two primary business segments &ndash; Homebuilding and Financial Services. The company engages in maintaining a 50/50 balance between build-to-order and spec sales, enabling it to meet immediate demand with spec homes while also accommodating buyers who prefer to customize their homes with build-to-order options.
The company has a long-term earnings growth expectation of 19% and delivered a trailing four-quarter earnings surprise of 10%, on average. It has a VGM Score of B. PulteGroup carries a Zacks Rank #2.&nbsp;
Banco de Chile: Headquartered in Santiago, Chile, Banco de Chile provides various banking services to customers in the Latin American country. These include deposit accounts, loans, payment-related cards and insurance solutions. The company also offers services such as cash management, treasury, financial advisory, trade finance, leasing, factoring, payment, payroll, collection, mutual fund management, securities brokerage, currency trading, investment management, collection, securitization and capital markets services.
It delivered a trailing four-quarter earnings surprise of 6.1%, on average. Banco de Chile carries a Zacks Rank #2.
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.&nbsp;
<a href="https://www.zacks.com/stock/news/2322873/buy-5-high-roe-stocks-as-low-inflation-data-steadies-market?cid=CS-BENZ-FT-analyst_blog|rw-2322873">To read this article on Zacks.com click here.</a>

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Toll Brothers, Inc. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/tol#NYSE">TOL</a>) is scheduled to report third-quarter fiscal 2024&nbsp; (ended Jul 31, 2024) results on Aug 20, after the closing bell.
In the last reported quarter, the company&#39;s earnings missed the Zacks Consensus Estimate by 18.2%, but revenues beat the mark by 12.6%. Earnings and revenues increased 18.6% and 13.2% from the prior-year period, respectively.
On an encouraging note, earnings topped analysts&#39; expectations in three of the trailing four quarters and missed on another occasion, the average surprise being 12.9%.
<h3>Trend in Estimate Revision</h3>
The Zacks Consensus Estimate for the fiscal third-quarter earnings per share increased to $3.28 from $3.25 over the past 60 days. The said figure indicates a 12.1% decline from the year-ago EPS of $3.73.
The consensus mark for revenues is pegged at $2.7 billion, indicating 0.3% year-over-year growth.
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<h3>Toll Brothers Inc. Price and EPS Surprise</h3>
<img alt="Toll Brothers Inc. Price and EPS Surprise" src="https://staticx-tuner.zacks.com/images/charts/6e/1723708230.png" style="height:294px; width:610px" title="" />
Toll Brothers Inc. price-eps-surprise | Toll Brothers Inc. Quote
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<h3>Factors to Note</h3>
Toll Brothers&#39; fiscal third-quarter home sales are expected to have increased slightly from the year-ago reported level, given higher deliveries. Although higher mortgage rates will impact the volumes to some extent, low-existing homes for sale have been driving demand for new homes in the market. This tailwind is likely to have helped the company drive growth.
This apart, its focus on luxury move-up buyers, who already possess a residence and are looking to shift to larger and better homes, will somewhat contribute to the revenues. Toll Brothers has been enjoying greater pricing power than other homebuilding companies, as luxury homebuyers are less sensitive to price changes. The company has also been benefiting from the strategy of broadening its product lines, price points and geographies, along with spec sales.
On the fiscal second-quarter earnings call, TOL stated that it expects higher home deliveries within 2,750-2,850 units from 2,524 units delivered in the prior-year quarter (considering the midpoint) at an average price of $950,000-$960,000 (suggesting a decline from $1,059,100 a year ago).
Higher land, labor and raw material costs, along with high incentives, are expected to put pressure on the fiscal third-quarter margins. Toll Brothers expects the adjusted home sales gross margin to be 27.7%, implying a decrease from 29.3% reported in the year-ago period. SG&amp;A expenses are estimated to be 9.2% of home sales revenues, indicating a rise from 8.6% reported in the year-ago period. The company expects the effective tax rate to be 26%. 
Our Estimates 
Our model predicts home sales revenues to decline 0.7% year over year to $2.66 billion due to a lower ASP projection of $955,300 (down 9.9% year over year). We expect deliveries to grow 10.1% year over year to 2,779 units in the quarter.
We expect net signed contracts to be around 2,904 units, indicating an improvement of 29.3% from the prior-year reported figure.
Our model predicts a backlog of 7,217 units, indicating a decline of 1.1% from the year-ago period. The same for the backlog (in values) is pegged at $7.57 billion, implying a decline of 3.9% from the $7.87 million recorded at the third quarter of fiscal 2023-end.
<h3>What Our Quantitative Model Predicts</h3>
Our proven model does not conclusively predict an earnings beat for Toll Brothers this time around. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, this is not the case here, as you will see below.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00%. You can uncover the best stocks to buy or sell before they&#39;re reported with our Earnings ESP Filter.
Zacks Rank: The company currently carries a Zacks Rank #3.
<h3>Peer Releases</h3>
Meritage Homes Corporation (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/mth#NYSE">MTH</a>) reported impressive second-quarter 2024 results, wherein the earnings and total closing revenues topped the Zacks Consensus Estimate and grew year over year.
MTH&#39;s quarterly results were backed by resilient housing demand and the company&#39;s progress in delivering quick-turning and affordable move-in-ready homes. Meritage Homes now expects 14,750-15,500 home closings for the year, up from the prior expected range of 14,500-15,000. The closings are now likely to generate revenues between $6.1 billion and $6.3 billion, up from the priorly expected range of $6-$6.2 billion.
NVR, Inc. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/nvr#NYSE">NVR</a>) reported mixed second-quarter 2024 results, with earnings missing the Zacks Consensus Estimate while Homebuilding revenues surpassed the same. On the other hand, both metrics increased on a year-over-year basis.
The upside was backed by improved demand trends, which resulted in higher settlements. Although the cancelation rate increased during the second quarter, growth in new orders and increased ASP of new orders are encouraging for the company&#39;s prospects. Settlements in the quarter were up 11% year over year to 5,659 units. New orders increased 3% from the prior-year quarter&#39;s level to 6,067 units. On a unit basis, backlog at the end of Jun 30, 2024, improved 3% from the prior-year quarter&#39;s figure to 11,597 homes and 6% on a dollar basis to $5.45 billion.
PulteGroup Inc. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/phm#NYSE">PHM</a>) reported stellar results in the second quarter of 2024, wherein earnings and revenues handily beat the Zacks Consensus Estimate. On a year-over-year basis, both the bottom and top lines increased.
PHM saw significant benefits from key factors that drove its success. The company&#39;s balanced operating model resulted in increases in closings, average sales price and gross margin, which collectively led to a 19.3% increase in EPS. Effective management of sales price, pace and starts on a community-by-community basis enabled the company to achieve high returns on invested capital and equity, evidenced by a 27.1% return on equity over the past 12 months.
<a href="https://www.zacks.com/stock/news/2322401/toll-brothers-tol-to-post-q3-earnings-what-s-in-the-cards?cid=CS-BENZ-FT-analyst_blog|earnings_preview-2322401">To read this article on Zacks.com click here.</a>

Mid Cap

Toll Brothers' to Post Q3 Earnings: What's in the Cards?

Wolfe Research analyst Truman Patterson downgrades PulteGroup (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/PHM#NYSE">PHM</a>) from Outperform to Peer Perform.

Downgrades

Wolfe Research Downgrades PulteGroup to Peer Perform

PulteGroup shares are trading lower after Seaport Global downgraded the stock from Buy to Neutral.

Seaport Global analyst Kenneth Zener downgrades PulteGroup (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/PHM#NYSE">PHM</a>) from Buy to Neutral.

Seaport Global Downgrades PulteGroup to Neutral

PulteGroup (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/PHM#NYSE">PHM</a>) has outperformed the market over the past 10 years by 11.15% on an annualized basis producing an average annual return of 21.92%. Currently, PulteGroup has a market capitalization of $26.42 billion. 
Buying $100 In PHM: If an investor had bought $100 of PHM stock 10 years ago, it would be worth $723.47 today based on a price of $127.33 for PHM at the time of writing.
<h3>PulteGroup's Performance Over Last 10 Years</h3>
<img src="https://www.benzinga.com/files/images/story/2024/1722616318_0.png" alt="comp_fig" />
Finally -- what's the point of all this? The key insight to take from this article is to note how much of a difference compounded returns can make in your cash growth over a period of time.
This article was generated by Benzinga's automated content engine and reviewed by an editor.

If You Invested $100 In This Stock 10 Years Ago, You Would Have $700 Today

PulteGroup's (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/PHM#NYSE">PHM</a>) short percent of float has risen 14.82% since its last report. The company recently reported that it has 6.82 million shares sold short, which is 4.26% of all regular shares that are available for trading. Based on its trading volume, it would take traders 3.53 days to cover their short positions on average.
<h3>Why Short Interest Matters</h3>
Short interest is the number of shares that have been sold short but have not yet been covered or closed out. <a href="https://www.benzinga.com/money/how-to-short-a-stock/">Short selling</a> is when a trader sells shares of a company they do not own, with the hope that the price will fall. Traders make money from short selling if the price of the stock falls and they lose if it rises.
Short interest is important to track because it can act as an indicator of market sentiment towards a particular stock. An increase in short interest can signal that investors have become more bearish, while a decrease in short interest can signal they have become more bullish.
See Also: <a href="https://www.benzinga.com/short-interest">List of the most shorted stocks</a>
<h3>PulteGroup Short Interest Graph (3 Months)</h3>
<img src="https://www.benzinga.com/files/images/story/2024/1722525316_0.png" alt="short_fig" />
As you can see from the chart above the percentage of shares that are sold short for PulteGroup has grown since its last report. This does not mean that the stock is going to fall in the near-term but traders should be aware that more shares are being shorted.
<h3>Comparing PulteGroup's Short Interest Against Its Peers</h3>
Peer comparison is a popular technique amongst analysts and investors for gauging how well a company is performing. A company's peer is another company that has similar characteristics to it, such as industry, size, age, and financial structure. You can find a company's peer group by reading its 10-K, proxy filing, or by doing your own similarity analysis.
According to <a href="https://pro.benzinga.com/">Benzinga Pro</a>, PulteGroup's peer group average for short interest as a percentage of float is 10.17%, which means the company has less short interest than most of its peers.
Did you know that increasing short interest can actually be bullish for a stock? <a href="https://www.benzinga.com/money/how-to-make-money-on-a-short-squeeze/">This post by Benzinga Money explains how you can profit from it.</a>
This article was generated by Benzinga's automated content engine and was reviewed by an editor.

Short Sellers

Short Ideas

How Is The Market Feeling About PulteGroup?

The broader U.S. equity markets witnessed a modest uptrend over the past few trading days, buoyed by optimism related to rate cuts driven by easing inflationary pressures and solid economic metrics that portrayed the resilience of the economy. In addition, a relatively healthy earnings performance from hitherto reported companies ignited hopes of a possible rate cut as early as September.
The markets now await the Federal Reserve&#39;s update on the monetary policy as it wraps up its policy meeting later today. Although the Fed is widely expected to keep the benchmark funds rate steady in the 5.25% to 5.5% range, investors are seeking cues for probable cuts in the near future. With a better-than-expected 2.8% annualized GDP growth in the second quarter and a robust labor market scenario, the conditions appear primed to heed the broader sentiments.
As investors employ a wait-and-see approach in a classic example of &quot;backing and filling&quot; in the market, they can benefit from &quot;cash cow&quot; stocks that garner higher returns. However, identifying cash-rich stocks alone does not make for a solid investment proposition unless it is backed by attractive efficiency ratios like return on equity (ROE). A high ROE ensures that the company is reinvesting cash at a high rate of return. Best Buy Co., Inc. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/bby#NYSE">BBY</a>), The AES Corporation (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/aes#NYSE">AES</a>), Lockheed Martin Corporation (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/lmt#NYSE">LMT</a>), PulteGroup, Inc. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/phm#NYSE">PHM</a>) and Banco de Chile (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/bch#NYSE">BCH</a>) are some of the stocks with high ROE to profit from.
<h3>Why ROE?</h3>
ROE = Net Income/Shareholders&#39; Equity
ROE helps investors distinguish profit-generating companies from profit burners and is useful in determining the financial health of a company. In other words, this financial metric enables investors to identify companies that diligently deploy cash for higher returns.
Moreover, ROE is often used to compare the profitability of a company with other firms in the industry &mdash; the higher, the better. It measures how well a company is multiplying its profits without investing new equity capital and portrays management&#39;s efficiency in rewarding shareholders with attractive risk-adjusted returns.
<h3>Parameters Used for Screening</h3>
In order to shortlist stocks that are cash-rich with high ROE, we have added Cash Flow greater than $1 billion and ROE greater than X-Industry as our primary screening parameters. In addition, we have taken a few other criteria into consideration to arrive at a winning strategy.
Price/Cash Flow lesser than X-Industry: This metric measures how much investors pay for $1 of free cash flow. A lower ratio indicates that investors need to pay less for a better cash flow-generating stock.
Return on Assets (ROA) greater than X-Industry: This metric determines how much profit a company earns for every dollar of asset, which includes cash, accounts receivable, property, equipment, inventory and furniture. The higher the ROA, the better it is for the company.
5-Year EPS Historical Growth greater than X-Industry: This criterion indicates that continued earnings momentum has translated into solid cash strength.
Zacks Rank less than or equal to 2: Zacks Rank #1 (Strong Buy) or 2 (Buy) stocks are known to outperform irrespective of the market environment.
Here are five of the 14 stocks that qualified the screening:
Best Buy: Headquartered in Richfield, MN, Best Buy is a multinational specialty retailer of consumer electronics, home office products, entertainment software, communication, food preparation, wellness, health, security, appliances and related services. The company retails technology products in the United States and Canada.
It has a long-term earnings growth expectation of 5.1% and delivered a trailing four-quarter earnings surprise of 11%, on average. It has a VGM Score of B. Best Buy carries a Zacks Rank #2.
AES: Arlington, VA-based AES is a global power company. Its businesses are spread across four continents in 14 countries. The company has four Strategic Business Units located in the United States and other regions across the globe. AES remains one of the forerunners in the utility industry&#39;s transition to clean energy by investing in sustainable growth and innovative solutions while delivering superior results.
It delivered a trailing four-quarter earnings surprise of 13.8%, on average. AES carries a Zacks Rank #2. It has a VGM Score of A.
Lockheed Martin: Based in Bethesda, MD, Lockheed Martin is the largest defense contractor in the world. Its main areas of focus are defense, space, intelligence, homeland security and information technology, including cyber security. Lockheed Martin currently operates through four businesses &mdash; Aeronautics, Missiles and Fire Control, Rotary and Missions Systems and Space Systems.
The company has a long-term earnings growth expectation of 4.2% and delivered a trailing four-quarter earnings surprise of 7.5%, on average. Lockheed Martin carries a Zacks Rank #2.
PulteGroup: Based in Atlanta, GA, PulteGroup engages in homebuilding and financial services businesses, primarily in the United States. The company conducts operations through two primary business segments &ndash; Homebuilding and Financial Services. The company engages in maintaining a 50/50 balance between build-to-order and spec sales, enabling it to meet immediate demand with spec homes while also accommodating buyers who prefer to customize their homes with build-to-order options.
The company has a long-term earnings growth expectation of 19% and delivered a trailing four-quarter earnings surprise of 10%, on average. It has a VGM Score of B. PulteGroup carries a Zacks Rank #2.
Banco de Chile: Headquartered in Santiago, Chile, Banco de Chile provides various banking services to customers in the Latin American country. These include deposit accounts, loans, payment-related cards and insurance solutions. The company also offers services such as cash management, treasury, financial advisory, trade finance, leasing, factoring, payment, payroll, collection, mutual fund management, securities brokerage, currency trading, investment management, collection, securitization and capital markets services.
It delivered a trailing four-quarter earnings surprise of 7.1%, on average. Banco de Chile carries a Zacks Rank #2. 
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
<a href="https://www.zacks.com/stock/news/2312735/5-high-roe-stocks-to-bet-on-as-markets-seek-rate-cut-clarity?cid=CS-BENZ-FT-analyst_blog|rw-2312735">To read this article on Zacks.com click here.</a>

Equities

Latin America

Tech

5 High ROE Stocks to Bet on as Markets Seek Rate Cut Clarity

Have you been paying attention to shares of PulteGroup (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/phm#NYSE">PHM</a>)? Shares have been on the move with the stock up 18.1% over the past month. The stock hit a new 52-week high of $130.93 in the previous session. PulteGroup has gained 25.9% since the start of the year compared to the 16.8% move for the Zacks Construction sector and the 20.8% return for the Zacks Building Products - Home Builders industry.
What&#39;s Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn&#39;t missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on July 23, 2024, PulteGroup reported EPS of $3.58 versus consensus estimate of $3.21 while it beat the consensus revenue estimate by 2.72%.
For the current fiscal year, PulteGroup is expected to post earnings of $13.20 per share on $17.37 billion in revenues. This represents a 12.63% change in EPS on an 8.13% change in revenues. For the next fiscal year, the company is expected to earn $13.54 per share on $18.28 billion in revenues. This represents a year-over-year change of 2.56% and 5.26%, respectively.
Valuation Metrics
PulteGroup may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
PulteGroup has a Value Score of A. The stock&#39;s Growth and Momentum Scores are B and C, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 9.9X current fiscal year EPS estimates, which is not in-line with the peer industry average of 9.9X. On a trailing cash flow basis, the stock currently trades at 10.3X versus its peer group&#39;s average of 9.6X. Additionally, the stock has a PEG ratio of 0.52. This isn&#39;t enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, PulteGroup currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if PulteGroup meets the list of requirements. Thus, it seems as though PulteGroup shares could have a bit more room to run in the near term.
<a href="https://www.zacks.com/stock/news/2310774/pultegroup-inc-phm-hit-a-52-week-high-can-the-run-continue?cid=CS-BENZ-FT-52_week_high-2310774">To read this article on Zacks.com click here.</a>

PulteGroup, Inc. Hit a 52 Week High, Can the Run Continue?

This whale alert can help traders discover the next big trading opportunities.
Whales are entities with large sums of money and we track their transactions here at Benzinga on our options activity scanner.
Traders will search for circumstances when the market estimation of an option diverges heavily from its normal worth. High amounts of trading activity could push option prices to exaggerated or underestimated levels. 
Here's the list of options activity happening in today's session: 
<table>
<thead>
<tr>
<th>Symbol</th>
<th>PUT/CALL</th>
<th>Trade Type</th>
<th>Sentiment</th>
<th>Exp. Date</th>
<th>Strike Price</th>
<th>Total Trade Price</th>
<th>Open Interest</th>
<th>Volume</th>
</tr>
</thead>
<tbody>
<tr>
<td>TSLA</td>
<td>CALL</td>
<td>SWEEP</td>
<td>BEARISH</td>
<td>07/26/24</td>
<td>$217.50</td>
<td>$113.4K</td>
<td>0</td>
<td>72.3K</td>
</tr>
<tr>
<td>BABA</td>
<td>CALL</td>
<td>TRADE</td>
<td>BEARISH</td>
<td>01/17/25</td>
<td>$100.00</td>
<td>$43.0K</td>
<td>8.3K</td>
<td>3.4K</td>
</tr>
<tr>
<td>NKE</td>
<td>CALL</td>
<td>SWEEP</td>
<td>BEARISH</td>
<td>09/20/24</td>
<td>$80.00</td>
<td>$76.5K</td>
<td>40.8K</td>
<td>2.6K</td>
</tr>
<tr>
<td>MCD</td>
<td>PUT</td>
<td>SWEEP</td>
<td>BEARISH</td>
<td>08/02/24</td>
<td>$245.00</td>
<td>$47.9K</td>
<td>3.0K</td>
<td>1.7K</td>
</tr>
<tr>
<td>BALY</td>
<td>CALL</td>
<td>TRADE</td>
<td>BEARISH</td>
<td>08/16/24</td>
<td>$15.00</td>
<td>$161.4K</td>
<td>3.2K</td>
<td>1.0K</td>
</tr>
<tr>
<td>CVNA</td>
<td>CALL</td>
<td>TRADE</td>
<td>BULLISH</td>
<td>08/16/24</td>
<td>$150.00</td>
<td>$30.2K</td>
<td>6.4K</td>
<td>771</td>
</tr>
<tr>
<td>PHM</td>
<td>PUT</td>
<td>TRADE</td>
<td>BULLISH</td>
<td>10/18/24</td>
<td>$135.00</td>
<td>$49.3K</td>
<td>2</td>
<td>597</td>
</tr>
<tr>
<td>PDD</td>
<td>PUT</td>
<td>SWEEP</td>
<td>BULLISH</td>
<td>08/23/24</td>
<td>$143.00</td>
<td>$37.9K</td>
<td>0</td>
<td>500</td>
</tr>
<tr>
<td>DECK</td>
<td>CALL</td>
<td>TRADE</td>
<td>BEARISH</td>
<td>08/16/24</td>
<td>$940.00</td>
<td>$50.7K</td>
<td>37</td>
<td>207</td>
</tr>
<tr>
<td>AMZN</td>
<td>PUT</td>
<td>TRADE</td>
<td>BEARISH</td>
<td>12/18/26</td>
<td>$190.00</td>
<td>$78.7K</td>
<td>864</td>
<td>191</td>
</tr>
</tbody>
</table>

<h2>Explanation</h2>
These bullet-by-bullet explanations have been constructed using the accompanying table. 
• For TSLA (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/TSLA#NASDAQ">TSLA</a>), we notice a call option sweep that happens to be bearish, is expiring today. Parties traded 300 contract(s) at a $217.50 strike. This particular call needed to be split into 5 different trades to become filled. The total cost received by the writing party (or parties) was $113.4K, with a price of $380.0 per contract. There were 0 open contracts at this strike prior to today, and today 72384 contract(s) were bought and sold. 
• For BABA (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BABA#NYSE">BABA</a>), we notice a call option trade that happens to be bearish, expiring in 175 day(s) on January 17, 2025. This event was a transfer of 250 contract(s) at a $100.00 strike. The total cost received by the writing party (or parties) was $43.0K, with a price of $172.0 per contract. There were 8306 open contracts at this strike prior to today, and today 3497 contract(s) were bought and sold. 
• Regarding NKE (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/NKE#NYSE">NKE</a>), we observe a call option sweep with bearish sentiment. It expires in 56 day(s) on September 20, 2024. Parties traded 933 contract(s) at a $80.00 strike. This particular call needed to be split into 32 different trades to become filled. The total cost received by the writing party (or parties) was $76.5K, with a price of $82.0 per contract. There were 40822 open contracts at this strike prior to today, and today 2652 contract(s) were bought and sold. 
• For MCD (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/MCD#NYSE">MCD</a>), we notice a put option sweep that happens to be bearish, expiring in 7 day(s) on August 2, 2024. This event was a transfer of 200 contract(s) at a $245.00 strike. This particular put needed to be split into 14 different trades to become filled. The total cost received by the writing party (or parties) was $47.9K, with a price of $239.0 per contract. There were 3006 open contracts at this strike prior to today, and today 1747 contract(s) were bought and sold. 
• For BALY (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BALY#NYSE">BALY</a>), we notice a call option trade that happens to be bearish, expiring in 21 day(s) on August 16, 2024. This event was a transfer of 828 contract(s) at a $15.00 strike. The total cost received by the writing party (or parties) was $161.4K, with a price of $195.0 per contract. There were 3235 open contracts at this strike prior to today, and today 1008 contract(s) were bought and sold. 
• Regarding CVNA (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/CVNA#NYSE">CVNA</a>), we observe a call option trade with bullish sentiment. It expires in 21 day(s) on August 16, 2024. Parties traded 35 contract(s) at a $150.00 strike. The total cost received by the writing party (or parties) was $30.2K, with a price of $865.0 per contract. There were 6415 open contracts at this strike prior to today, and today 771 contract(s) were bought and sold. 
• For PHM (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/PHM#NYSE">PHM</a>), we notice a put option trade that happens to be bullish, expiring in 84 day(s) on October 18, 2024. This event was a transfer of 50 contract(s) at a $135.00 strike. The total cost received by the writing party (or parties) was $49.3K, with a price of $987.0 per contract. There were 2 open contracts at this strike prior to today, and today 597 contract(s) were bought and sold. 
• Regarding PDD (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/PDD#NASDAQ">PDD</a>), we observe a put option sweep with bullish sentiment. It expires in 28 day(s) on August 23, 2024. Parties traded 29 contract(s) at a $143.00 strike. This particular put needed to be split into 3 different trades to become filled. The total cost received by the writing party (or parties) was $37.9K, with a price of $1305.0 per contract. There were 0 open contracts at this strike prior to today, and today 500 contract(s) were bought and sold. 
• Regarding DECK (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DECK#NYSE">DECK</a>), we observe a call option trade with bearish sentiment. It expires in 21 day(s) on August 16, 2024. Parties traded 35 contract(s) at a $940.00 strike. The total cost received by the writing party (or parties) was $50.7K, with a price of $1450.0 per contract. There were 37 open contracts at this strike prior to today, and today 207 contract(s) were bought and sold. 
• Regarding AMZN (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AMZN#NASDAQ">AMZN</a>), we observe a put option trade with bearish sentiment. It expires in 875 day(s) on December 18, 2026. Parties traded 25 contract(s) at a $190.00 strike. The total cost received by the writing party (or parties) was $78.7K, with a price of $3150.0 per contract. There were 864 open contracts at this strike prior to today, and today 191 contract(s) were bought and sold. 
Options Alert Terminology 
 - Call Contracts: The right to buy shares as indicated in the contract. 
 - Put Contracts: The right to sell shares as indicated in the contract. 
 - Expiration Date: When the contract expires. One must act on the contract by this date if one wants to use it. 
 - Premium/Option Price: The price of the contract. 
For more information, visit our <a href="https://pro.benzinga.com/blog/how-to-understand-option-alerts/">Guide to Understanding Options Alerts</a> or read <a href="https://www.benzinga.com/markets/options">more news on unusual options activity</a>. 
This article was generated by Benzinga's automated content engine and reviewed by an editor.

Options

AMZN

BABA

BALY

CVNA

DECK

Citigourp Global Markets 2% Protected Notes Linked To The Djia

TSLA

10 Consumer Discretionary Stocks Whale Activity In Today's Session

Raymond James analyst Buck Horne maintains PulteGroup (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/PHM#NYSE">PHM</a>) with a Outperform and raises the price target from $135 to $145.

Raymond James Maintains Outperform on PulteGroup, Raises Price Target to $145

Michael Rehaut, an analyst from J.P. Morgan, maintained the Buy rating on PulteGroup (PHM – Research Report). The associated price target remains t...

PulteGroup's Financial Outlook: A Buy Rating Amid Mortgage Trends and Strategic Positioning

PulteGroup declares $0.20 dividend

Lennar: Remains Opportunistic Even After Big Run, Reiterate Hold

In a report released today, Sam Reid from Wells Fargo maintained a Buy rating on PulteGroup (PHM – Research Report), with a price target of $150.00...

Wells Fargo Remains a Buy on PulteGroup (PHM)

The homebuilder sector is well-positioned for expansion due to expected Fed rate cuts that could lower mortgage rates, increase housing demand, and boost market growth. Amid this favorable backdrop, investors may consider watching fundamentally strong homebuilder stocks: PulteGroup (PHM) and NVR (NVR). Read more... The homebuilder market shows promise as potential Fed rate cuts in September could lead to lower mortgage rates, sparking increased housing demand and supply. While the effects may unfold gradually, steady rate declines are expected to benefit homebuilders, buyers, and sellers alike, creating a balanced market without overwhelming demand spikes that could strain supply.
Considering this outlook, it could be wise to keep an eye on quality homebuilder stocks: PulteGroup, Inc. (<a href="https://stocknews.com/stock/PHM/">PHM</a>) and NVR, Inc. (<a href="https://stocknews.com/stock/NVR/">NVR</a>).
The U.S. economy grew at an annualized rate of 3.0% in Q2, surpassing the 1.8% non-inflationary target. Inflation is approaching the Fed's 2% goal, easing price concerns. Notably, a <a href="https://www.reuters.com/markets/us/fed-cut-rates-by-25-basis-points-sept-18-twice-more-2024-2024-09-10/">25-basis point rate cut</a> is expected soon, lowering borrowing costs, while unemployment is projected to remain stable at 4.2%, signaling steady job availability.
Alongside, mortgage rates have <a href="https://edition.cnn.com/2024/09/12/economy/mortgage-rates-september-12/index.html">fallen to 6.20%</a>, the lowest since February 2023, but affordability remains tight due to high home prices and supply shortages. Therefore, the Fed rate cut next week could lower rates further, boosting the homebuilder market. The U.S. residential construction market is projected to grow at a <a href="https://www.technavio.com/report/residential-construction-market-industry-analysis">4.5% CAGR</a> until 2028.
Furthermore, the homebuilder sector thrives on population growth, urbanization, rising incomes, and government efforts for affordable housing, all driving robust market expansion and positioning the industry for sustained growth. Considering these conducive trends, let's analyze the fundamental aspects of the two <a href="https://stocknews.com/category/homebuilders/">Homebuilders</a> industry picks to watch, beginning with the second choice.
Stock #2: PulteGroup, Inc. (<a href="https://stocknews.com/stock/PHM/">PHM</a>)
PHM engages in the homebuilding business in the United States. It acquires and develops land primarily for residential purposes and constructs housing on such land. The company also offers various home designs under the Centex, Pulte Homes, Del Webb, DiVosta Homes, American West, and John Wieland Homes and Neighborhoods brand names.
On September 4, 2024, PHM announced a quarterly cash dividend of $0.20 per share, payable on October 2, 2024, to shareholders of record as of September 17, 2024.
On July 9, 2024, PHM announced the pre-sale of Deep Creek at Jordanelle Ridge, its first Utah community in over 20 years. Located in Heber City, it offers outdoor living with city conveniences, featuring eight home designs starting in the mid-$700Ks, along with upcoming townhomes and amenities.
In terms of the trailing-12-month EBIT margin, PHM's 21.59% is 174% higher than the 7.88% industry average. Its 22.09% trailing-12-month <a href="https://www.investopedia.com/terms/e/ebitda-margin.asp">EBITDA margin</a> is 93.1% higher than the 11.44% industry average. Also, the stock's 26.92% trailing-12-month Return on Common Equity is 136.4% higher than the 11.39% industry average.
PHM's total revenues for the fiscal second quarter that ended on June 30, 2024, increased 9.8% year-over-year to $4.60 billion. The company's net income came in at $809.13 million, representing a 12.3% year-over-increase, while its EPS grew 19.3% over the prior-year quarter to $3.83.
Street expects PHM's revenue for the quarter ending September 30, 2024, to increase 7.1% year-over-year to $4.29 billion. Its EPS for the same quarter is expected to increase 10.1% year-over-year to $3.19. It surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 72.6% to close the last trading session at $135.30.
PHM's positive outlook is reflected in its <a href="https://stocknews.com/powr-ratings/">POWR Ratings</a>. It has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It is ranked #3 out of 23 stocks in the B-rated <a href="https://stocknews.com/category/homebuilders/">Homebuilders</a> industry. It has an A grade for Momentum and a B for Sentiment and Quality. To access PHM's grades for Growth, Value, and Stability, <a href="https://stocknews.com/stock/PHM/">click here</a>.
Stock #1: NVR, Inc. (<a href="https://stocknews.com/stock/NVR/">NVR</a>)
NVR operates as a homebuilder in the United States. The company operates through its Homebuilding and Mortgage Banking segments. It engages in the construction and sale of single-family detached homes, townhomes, and condominium buildings under the Ryan Homes, NVHomes, and Heartland Homes names.
In terms of the trailing-12-month net income margin, NVR's 16.18% is 257.8% higher than the 4.52% industry average. Its 20.29% trailing-12-month EBIT margin is 157.5% higher than the 7.88% industry average. Likewise, the stock's 25.57% trailing-12-month Return on Total Assets is 526.9% higher than the 4.08% industry average.
For the fiscal second quarter ended June 30, 2024, NVR's revenue increased 11.6% year-over-year to $2.55 billion, and its operating income was $495.25 million, up 12.2% from the year-ago value. Its net income was $400.90 million. Additionally, the company's EPS rose 3.6% from the prior-year quarter to $120.69.
Analysts expect NVR's EPS and revenue for the quarter ending September 30, 2024, to increase 5% and 7.1% year-over-year to $131.52 and $2.69 billion, respectively. NVR surpassed the Street EPS estimates in three of the trailing four quarters. Over the past nine months, the stock has gained 40.4% to close the last trading session at $9,179.38.
NVR's strong prospects are reflected in its POWR Ratings. It has an overall rating of B, equating to a Buy in our proprietary rating system.
It has an A grade for Momentum and a B for Sentiment and Quality. It is ranked #2 in the Homebuilders industry. <a href="https://stocknews.com/stock/NVR/">Click here</a> to see NVR's Growth, Value, and Stability ratings.
What To Do Next?
Discover 10 widely held stocks that our proprietary model shows have tremendous downside potential. Please make sure none of these "death trap" stocks are lurking in your portfolio:
<a href="https://report.stocknews.com/free-report/10-stocks-to-sell/?formplacement=artbotad_10sell">10 Stocks to SELL NOW! &gt;</a>

<hr />
NVR shares were trading at $9,309.26 per share on Friday afternoon, up $129.88 (+1.41%). Year-to-date, NVR has gained 32.98%, versus a 18.94% rise in the benchmark S&amp;P 500 index during the same period.
<hr><div style="clear:both;"></div> <h2>About the Author: Abhishek Bhuyan</h2> <img src='https:/wp-content/uploads/2023/07/ABhuyan.jpg' style="float:left; padding:5px;width:125px;">Abhishek embarked on his professional journey as a financial journalist due to his keen interest in discerning the fundamental factors that influence the future performance of financial instruments.<a href="https://stocknews.com/authors/?author=abhishek-bhuyan">More...</a>The post <a href=https://stocknews.com/news/nvr-phm-2-quality-homebuilder-stocks-to-watch-ahead-of-potential-rate/>2 Quality Homebuilder Stocks to Watch Ahead of Potential Rate Cuts</a> appeared first on <a href=https://stocknews.com/>StockNews.com</a>

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KB Home's (KBH) long-term prospects appear promising with continuous portfolio expansion and growing demand. So, should you invest in this stock following its earnings release? Read more to find out KB Home (<a href="https://stocknews.com/stock/KBH/">KBH</a>), a leading homebuilding company that builds and sells various homes, is set to report its financial results for the third quarter, which ended August 31, 2024, after the market close on September 24, 2024. Street expects the company's revenue and EPS for the third quarter to grow 8.9% and 15% year-over-year to $1.73 billion and $2.07, respectively.
During the last reported quarter, KBH's net orders increased by 2% to 3,997, and the net order value grew by 7% to $2.03 billion. Further, its monthly net orders per community increased to 5.5 from 5.2. Also, the company expects its ending community count in the range of 250 to 255 over the full year 2024.
KB Home offers affordable housing facilities and focuses on providing personalized, spacious, new homes and family-friendly amenities. During the second quarter, KBH opened multiple new communities to cater to the diverse demands of its customers. These communities include Rhythm, Farmlore Villas, Overlook Ranch, Catania at Citrine, and Enclave.
Further, amid interest rate cuts, coupled with slowing inflation, more and more individuals are interested in purchasing houses, resulting in strong growth for the homebuilding industry. The US residential construction market is expected to grow at a <a href="https://www.mordorintelligence.com/industry-reports/us-residential-construction-market">CAGR of 3%</a>, driven by affordable housing trends.
Regarding the second quarter results, Jerey Mezger, Chairman and Chief Executive Officer of the company, commented, "Buyers remained resilient in their desire for homeownership despite the volatility in mortgage interest rates."
He added, "Our pace of monthly net orders per community was one of our highest second quarter levels in many years, which we believe reflected the compelling, personalized choice that our Built to Order model offers to meet each buyer's lifestyle and budget."
Shares of KBH have gained 29.4% over the past six months and 79.6% over the past year to close its last trading session at $86.75.
Let's look at factors that could influence KBH's performance in the upcoming months.
Mixed Financials
For the second quarter that ended May 31, 2024, KBH's total revenues decreased 3.1% year-over-year to $1.71 billion. Also, its <a href="https://www.investopedia.com/terms/o/operatingincome.asp">operating income</a> declined 6.9% from the year-ago value to $188.18 million. Its total pretax income of $221.12 million reflects growth of 2.9% from the prior-year quarter.
Furthermore, the company's net income and EPS came in at $168.42 million and $2.15, indicating increases of 2.4% and 10.8% from the prior year's quarter, respectively. As of May 31, 2024, KBH's total assets stood at $6.81 billion, compared to $6.65 billion as of November 30, 2023.
According to the company's guidance for the full year 2024, KBH expects its housing revenues to range from $6.70 billion to $6.90 billion. Its average selling price is expected to be between $485,000 and $495,000. Also, the company expects homebuilding operating income as a percentage of revenues between 11% and 11.4%.
Solid Historical Growth
KBH's revenue grew at a CAGR of 10.5% over the past three years, while its EBITDA improved at a CAGR of 11.9%. Its EBIT increased at a CAGR of 12% over the same period, while the company's net income and EPS grew at respective CAGRs of 12.6% and 19.2% over the same time frame.
Further, the company's tangible book value and total assets have increased at a CAGR of 11.4% and 6.6% over the past three years, respectively.
Favorable Analyst Estimates
Analysts expect KBH's revenue for the third quarter (ending August 2024) to come in at $1.73 billion, indicating an increase of 8.9% year-over-year. The consensus EPS estimate of $2.07 for the same period reflects a 15% year-over-year improvement. Moreover, the company has surpassed the consensus revenue and EPS estimates in each of the trailing four quarters.
For the fiscal year (ending November 2024), the company's revenue and EPS are anticipated to grow 6.5% and 19.7% year-over-year to $6.83 billion and $8.41, respectively. In addition, Street expects its revenue and EPS for the fiscal year 2025 to grow 4.8% and 6.7% from the prior year to $7.16 billion and $8.97, respectively.
Mixed Profitability
KBH's trailing-12-month EBIT margin of 11.76% is 50.7% higher than the 7.81% industry average. However, its trailing-12-month gross profit margin of 21.89% is 41.1% lower than the industry average of 37.19%. And the stock's trailing-12-month levered FCF margin of 4.94% is lower than the industry average of 5.25%.
Furthermore, the stock's ROCE, ROTC, and ROTA of 15.54%, 8.46%, and 8.92% are favorable compared to the 11.32%, 6.08%, and 4.12% industry average, respectively.
Lower Valuation
In terms of forward non-GAAP P/E, KBH is currently trading at 10.31x, 37.2% lower than the industry average of 16.41x. Also, the stock's forward EV/Sales and Price/Sales of 1.11x and 0.96x are considerably lower than the industry average of 1.25x and 0.92x, respectively.
Additionally, the stock's forward EV/EBITDA and Price/Book of 7.70x and 1.57x are 22.8% and 38.2% lower than the industry averages of 9.98x and 2.54x, respectively.
POWR Ratings Reflect Uncertainty
KBH's mixed fundamentals are reflected in its <a href="https://stocknews.com/powr-ratings/">POWR Ratings</a>. The stock has an overall rating of C, translating to a Neutral in our proprietary system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight distinct categories. KBH has a B grade for Value, justified by its lower-than-industry valuation.
However, the stock has a C grade for Growth, in sync with its mixed performance in the last reported quarter. It also has a D grade for Stability, consistent with its 5-year beta of 1.81.
KBH is ranked #15 among the 23 stocks in the <a href="https://stocknews.com/category/homebuilders/">Homebuilders</a> industry.
Beyond what I have stated above, we have also given KBH grades for Sentiment, Momentum, and Quality. Get access to all the KBH ratings <a href="https://stocknews.com/stock/KBH/">here</a>.
Bottom Line
KBH is set to report its third quarter earnings during late September. The company's long-term prospects appear promising, driven by its expanding product offerings, strategic investments, and solid order growth.
Despite solid historical growth and lower valuation, KB Home grapples with declining revenue and operating income.
Given KBH's mixed financial results and profitability, waiting for a better entry point in this stock seems prudent.
Stocks to Consider Instead of KB Home (KBH)
Given its near-term uncertain prospects, the odds of KBH outperforming in the weeks and months ahead are compromised. However, there are many industry peers with much more impressive POWR Ratings. So, consider these A (Strong Buy) or B (Buy) stocks from the <a href="https://stocknews.com/category/homebuilders/">Homebuilders</a> industry instead:
M/I Homes, Inc. (<a href="https://stocknews.com/stock/MHO/">MHO</a>)
NVR Inc. (<a href="https://stocknews.com/stock/NVR/">NVR</a>)
PulteGroup Inc. (<a href="https://stocknews.com/stock/PHM/">PHM</a>)
For exploring more A and B-rated homebuilders stocks, <a href="https://stocknews.com/category/homebuilders/">click here</a>.
What To Do Next?
Discover 10 widely held stocks that our proprietary model shows have tremendous downside potential. Please make sure none of these "death trap" stocks are lurking in your portfolio:
<a href="https://report.stocknews.com/free-report/10-stocks-to-sell/?formplacement=artbotad_10sell">10 Stocks to SELL NOW! &gt;</a>

<hr />
KBH shares were trading at $86.82 per share on Wednesday afternoon, up $0.07 (+0.08%). Year-to-date, KBH has gained 40.43%, versus a 19.28% rise in the benchmark S&amp;P 500 index during the same period.
<hr><div style="clear:both;"></div> <h2>About the Author: Rjkumari Saxena</h2> <img src='https:/wp-content/uploads/2024/04/Rajkumari-Saxena_Image-1.jpeg' style="float:left; padding:5px;width:125px;">Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.<a href="https://stocknews.com/authors/?author=rajkumari-saxena">More...</a>The post <a href=https://stocknews.com/news/kbh-mho-nvr-phm-can-kb-home-outperform-as-demand-for-affordable-housing-grows/>Can KB Home Outperform as Demand for Affordable Housing Grows?</a> appeared first on <a href=https://stocknews.com/>StockNews.com</a>

Can KB Home Outperform as Demand for Affordable Housing Grows?

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