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.

Earnings

Large Cap

Mid Cap

News

Guidance

Technicals

Small Cap

Federal Reserve

Markets

Analyst Ratings

Trading Ideas

TMHC

KB Home (NYSE: KBH) is slated to report third-quarter fiscal 2024 results (ended Aug. 31) on Sept. 24, after the closing bell.

Should You Buy, Sell, or Hold KB Home Before Q3 Earnings?

Earnings Beats

Lennar Corporation (NYSE: LEN) reported third-quarter fiscal 2024 results, wherein its earnings and revenues surpassed the Zacks Consensus Estimate.

Lennar Q3 Earnings &amp; Revenues Beat, Stock Down on Tepid Q4 View

Row,Of,High,Density,Homes,In,California

Long Ideas

Previews

Signals

Real Estate

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

PulteGroup Inc

PHARMACOM BIOVET INC by PharmaCom BioVet, Inc.

PharmaCom BioVet Inc

Pharma Mar SA

PHOENIX MECANO AG STEIN by PHOENIX MECANO AG STEIN AM RHEIN

Phoenix Mecano AG

Oppenheimer analyst Tyler Batory 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 $151 to $168.

Price Target

Oppenheimer Maintains Outperform on PulteGroup, Raises Price Target to $168

PulteGroup (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/PHM#NYSE">PHM</a>) has outperformed the market over the past 5 years by 16.8% on an annualized basis producing an average annual return of 31.08%. Currently, PulteGroup has a market capitalization of $29.79 billion. 
Buying $100 In PHM: If an investor had bought $100 of PHM stock 5 years ago, it would be worth $396.82 today based on a price of $143.53 for PHM at the time of writing.
<h3>PulteGroup's Performance Over Last 5 Years</h3>
<img src="https://www.benzinga.com/files/images/story/2024/1727730011_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 PulteGroup 5 Years Ago Would Be Worth This Much Today

KB Home (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/kbh#NYSE">KBH</a>) is slated to report third-quarter fiscal 2024 results (ended Aug. 31) on Sept. 24, after the closing bell.
In the last reported quarter, KB Home&#39;s earnings and revenues beat the Zacks Consensus Estimate by 20.8% and 4.3%, respectively. On a year-over-year basis, earnings increased 11% on 3.4% lower revenues.
The company&#39;s earnings topped analysts&#39; expectations in 31 of the trailing 34 quarters.
<div class="chart_embed">
<h3>KB Home Price and EPS Surprise</h3>
<img alt="KB Home Price and EPS Surprise" src="https://staticx-tuner.zacks.com/images/charts/9d/1727092560.png" style="height:263px; width:538px" title="" />
KB Home price-eps-surprise | KB Home Quote
</div>
<h2>How Are Estimates Placed for KBH?</h2>
For the quarter to be reported, the Zacks Consensus Estimate for earnings has remained unchanged at $2.04 per share over the past 60 days. The projected figure indicates an increase of 13.3% from the year-ago quarter&#39;s earnings of $1.80 per share.
The consensus estimate for revenues is pegged at $1.73 billion, implying growth of 8.8% from the prior-year quarter.
<h2>What the Zacks Model Unveils for KB Home</h2>
Our proven model predicts an earnings beat for KB Home this time around. This is because a stock needs to have the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen.
Earnings ESP: KB Home has an Earnings ESP of +0.08%.
Zacks Rank: KB Home currently has a Zacks Rank #3.
<h2>Factors to Shape KBH&#39;s Q3 Results</h2>
Revenues: KB Home&#39;s top line in third-quarter fiscal 2024 is likely to have increased, given higher Housing revenues primarily attributable to growth in deliveries and favorable pricing. The company has been benefiting from the strong buyer demand, particularly for built-to-order homes, despite the volatility in mortgage rates.
The company&#39;s focus on personalization and its ability to offer both quick move-in and personalized homes might have helped the company drive growth. KB Home has also been utilizing mortgage buydowns as a key component of its strategy to maintain strong sales amid fluctuating mortgage rates.
Although the company has not provided an explicit forecast for its third-quarter absorption pace, the positive momentum from the fiscal second quarter &mdash; driven by strong demand, shorter build times, and strategic pricing &mdash; suggests that the absorption pace is expected to remain solid in the fiscal third quarter. The company is focusing on balancing pace and pricing to optimize margins while still driving volume.
The company expects housing revenues in the range of $1.65-$1.75 billion compared with the year-ago figure of $1.57 billion. KBH anticipates the average selling price&nbsp;to be $482,000, indicating an increase from $466,300 reported a year ago.
Our model projects housing revenues to grow 9.1% year over year to $1.72 billion in the quarter. We expect ASP to increase 3.3% to $481,500. We expect total deliveries in the quartet to grow 5.6% year over year.
Margins: Although initiatives like the Returns-Focused Growth Plan and Built-to-Order approach are positives, increasing construction and labor costs are likely to put pressure on the bottom line.
The company anticipates that the housing gross margin for the third quarter of 2024 will decline between 21% and 21.4% (compared with 21.5% in the year-ago quarter). This projection accounts for the concessions provided to homebuyers in the latter half of last year, which were influenced by the challenging market conditions at that time and is expected to close in this quarter.
Selling, general &amp; administrative expenses (SG&amp;A), as a percentage of housing revenues, are likely to be 9.9%-10.3%. We expect SG&amp;A expenses to be 10.2% in the quarter, the same as the year-ago figure.
The company expects adjusted operating margin between 10.8% and 11.4%. Our model predicts the adjusted operating margin to be 10.9% in the quarter, down from 11.4% a year ago.
The company expects an effective tax rate of approximately 24% for the quarter.
Orders &amp; Backlogs: We anticipate that new orders will increase to 3,357 units, up 8.4% from the previous year. With a limited supply of pre-owned homes available, homebuyers are turning their attention to builders who have increased their construction efforts to meet the rising demand. KB Home, along with other homebuilding companies, has benefited significantly from this trend despite ongoing challenges.
We expect the backlog to be 6,062 units, implying a decline from 7,008 units reported in the prior-year quarter.
Meanwhile, our model predicts Financial Services revenues to be $8.3 million for the fiscal third quarter. We expect Financial Services pretax income to be $12.2 million in the quarter compared with the year-ago quarter&#39;s figure of $9.9 million.
<h2>KB Home&#39;s Price Performance &amp; Valuation</h2>
KBH&#39;s stock has exhibited an upward movement in the past six months.&nbsp;The stock has gained 27.5%, outperforming the Zacks Building Products - Home Builders industry&#39;s rise of 16.4% in the same time frame.
The company has also outperformed its peer companies like Meritage Homes Corporation&nbsp;(NYSE: <a class="ticker" href="https://www.benzinga.com/stock/mth#NYSE">MTH</a>) (up 21.6% in the past six months) and Taylor Morrison Home Corporation&nbsp;(NYSE: <a class="ticker" href="https://www.benzinga.com/stock/tmhc#NYSE">TMHC</a>) (up 16%).
<h2>6-Month Price Performance of KBH Stock</h2>
<img alt="Zacks Investment Research" src="https://staticx-tuner.zacks.com/images/articles/charts/2d/78791.jpg?v=1075297864" />
Image Source: Zacks Investment Research
Technical indicators suggest continued strong performance for KBH. Notably, the 50-day SMA continues to read higher than the 200-day SMA, signaling the bullish trend.
<h2>KBH Stock Trades Above 50 and 200-Day Moving Average</h2>
<img alt="Zacks Investment Research" src="https://staticx-tuner.zacks.com/images/articles/charts/55/78793.jpg?v=505003855" />
Image Source: Zacks Investment Research
KBH stock is trading at a discount compared with the industry and slightly higher than its median. Despite the company&#39;s shares&#39; outperformance compared to its industry, KBH&#39;s current valuation is still considered undervalued. This might imply that the market has not yet fully recognized or priced in the company&#39;s potential growth prospects or earnings potential. The company is also trading currently at a discount compared to the industry&#39;s big shots like PulteGroup, Inc. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/phm#NYSE">PHM</a>).
<img alt="Zacks Investment Research" src="https://staticx-tuner.zacks.com/images/articles/charts/6c/78792.jpg?v=689735686" />
Image Source: Zacks Investment Research
<h2>How to Play KB Home Stock?</h2>
Investors may want to hold KB Home stock due to its resilience in a challenging housing market, driven by strategic pricing and effective inventory management. Despite industry headwinds like expensive mortgages and slowing demand, KB Home has maintained strong financial performance through a focus on affordability and margin optimization. The company&#39;s BTO model has contributed to positive inventory dynamics, supporting confidence in their margin guidance for the second half of 2024.
While the recent Federal Reserve rate cut to 4.75%-5% may provide some market relief, its full impact on homebuilding remains uncertain, as mortgage rates may have already factored in the anticipated cut. Additionally, rising land costs, competition from the resale market, and supply chain disruptions pose challenges to the company&#39;s growth potential.
Though KB Home&#39;s stock has shown strength with a solid 50-day moving average and discounted valuation, a lack of upward estimate revisions in the past two months signals limited near-term upside. Investors might consider holding the stock while waiting for more favorable market conditions and further clarity on KB Home&#39;s long-term performance.
KB Home&#39;s operational resilience and strategic focus in a difficult environment make it a stock worth holding, although potential investors may opt for caution until clearer signals of stability emerge in both the company&#39;s performance and broader market trends.
<a href="https://www.zacks.com/stock/news/2339964/should-you-buy-sell-or-hold-kb-home-before-q3-earnings?cid=CS-BENZ-FT-analyst_blog|earnings_preview-2339964">To read this article on Zacks.com click here.</a>

Lennar Corporation (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/len#NYSE">LEN</a>) reported third-quarter fiscal 2024 results, wherein its earnings and revenues surpassed the Zacks Consensus Estimate.
On a year-over-year basis, revenues increased, given the company&#39;s emphasis on maintaining a steady production rate to drive sales momentum. Lennar strategically utilized pricing, incentives, marketing expenditure and dynamic pricing insights to ensure steady sales volume despite fluctuations in interest rates.
However, earnings fell by a cent from the year-ago period. LEN&#39;s stock plunged 2.4% in the after-hours trading session on Sept. 19. Investors&#39; sentiments might have been hurt by lower earnings and gross margin in the fiscal third quarter, as well as tepid fiscal fourth-quarter guidance.
<h2>Quarterly Numbers</h2>
LEN reported adjusted earnings per share (excluding mark-to-market gains on technology investments and one-time items in its Multifamily segment) of $3.90, which topped the Zacks Consensus Estimate of $3.62 by 7.7%. The metric, however, slipped 0.3% year over year from $3.91 per share.
<div class="chart_embed">
<h3>Lennar Corporation Price, Consensus and EPS Surprise</h3>
<img alt="Lennar Corporation Price, Consensus and EPS Surprise" src="https://staticx-tuner.zacks.com/images/charts/fa/1726841318.png" style="height:265px; width:589px" title="" />
Lennar Corporation price-consensus-eps-surprise-chart | Lennar Corporation Quote
Revenues of $9.42 billion topped the Zacks Consensus Estimate of $9.29 billion by 1.4% and rose 7.9% year over year from $8.73 billion.
</div>
<h2>Segment Details</h2>
Homebuilding: Revenues of the segment totaled $9.05 billion, up 8.7% from the prior-year quarter. Under the Homebuilding umbrella, home sales contributed $9.02 billion to total revenues, up 8.8% from a year ago.
Land sales accounted for $19.5 million, down from $20.4 million in the prior-year quarter. The Other homebuilding unit contributed $8.6 million to homebuilding revenues, down from $12.3 million a year ago.
Home deliveries for the reported quarter improved 16% from the year-ago level to 21,516 units. The reported figure was better than our projection of 20,598 units for the quarter. The average sales price&nbsp;of homes delivered was $422,000, down 5.8% from the year-ago figure due to pricing to market through an increased use of incentives and product mix. Our model had predicted ASP to be $432,910 for the fiscal third quarter.
New orders rose 5% from the year-ago quarter to 20,587 homes. However, the potential value of net orders fell 0.9% year over year to $8.56 billion.
Backlog at the fiscal third-quarter end declined 20.5% from the year-ago quarter to 16,944 homes. Potential housing revenues from backlog decreased 21.4% year over year to $7.75 billion.
The gross margin on home sales was 22.5% for the quarter, down 190 basis points (bps). Notably, the reported figure came below our projection of 23% for the quarter. The decline was mainly due to decreased revenues per square foot and increased land costs year over year.
SG&amp;A expenses &mdash; as a percentage of home sales &mdash; decreased 30 bps to 6.7% due to a decrease in broker commissions and benefits of LEN&#39;s technology efforts.
Financial Services: The segment&#39;s revenues increased year over year to $273.3 million from $266.2 million for the reported quarter. Operating earnings for the quarter increased to $144.4 million from $149 million a year ago.
Lennar Multi-Family: Revenues of $93.4 million in the segment were down from $137.4 million in the prior-year quarter. The segment registered operating earnings of $78.9 million for the quarter against a loss of $8.7 million a year ago.
Lennar Other: The segment&#39;s revenues totaled $3.6 million, significantly down from $7.4 million a year ago. Its operating earnings were $20.1 million for the quarter against a loss of $26.2 million a year ago.
<h2>Financials</h2>
At the fiscal third-quarter end, Lennar had homebuilding cash and cash equivalents of $4.04 billion, down from $6.27 billion at the end of fiscal 2023. LEN has no outstanding borrowings under the $2.2 billion revolving credit facility, thereby providing $6.2 billion of liquidity.
The total homebuilding debt was $2.26 billion as of the fiscal third-quarter end, down from $2.82 billion at the fiscal 2023-end. Homebuilding debt to capital at the fiscal third-quarter end was 7.6%, down from 9.6% at the fiscal 2023-end.
LEN repurchased 3.4 million shares for $519 million in the fiscal third quarter.
<h2>Guidance</h2>
For fourth-quarter fiscal 2024, the company expects deliveries within 22,500-23,000 homes, depicting a fall from 23,795 homes delivered in the year-ago period. The company expects the ASP of the delivered units to be nearly $425,000, down from an ASP of $441,000 reported a year ago.
The gross margin on home sales is expected to be flat year over year. SG&amp;A expenses, as a percentage of home sales, are likely to be in the range of 6.7-6.8% for the quarter. In the prior year, gross margin was 24.2%, and SG&amp;A was 6.6%.
New orders are likely to be within 19,000-19,300 units, up from 17,366 homes reported a year ago.
Financial Services operating earnings are expected to be around $140 million, down from $168 million a year ago.
<h2>LEN&#39;s Zacks Rank &amp; Stocks to Consider</h2>
Lennar currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the same space are M/I Homes, Inc. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/mho#NYSE">MHO</a>), Meritage Homes Corporation (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/mth#NYSE">MTH</a>)&nbsp;and PulteGroup, Inc.&nbsp;(NYSE: <a class="ticker" href="https://www.benzinga.com/stock/phm#NYSE">PHM</a>). Each stock presently carries a Zacks Rank #2 (Buy).
M/I Homes is a Columbus, OH-based homebuilder that engages in the construction and sale of single-family residential homes.
MHO&#39;s EPS estimates for 2024 have increased to $19.76 from $19.58 over the past 30 days. The company&#39;s earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed on one occasion, the average being 4.8%. MHO&#39;s earnings are expected to rise 21.9% year over year in 2024.
Meritage Homes is a Scottsdale, AZ-based company that designs and builds single-family attached and detached homes.
MTH&#39;s EPS estimates for 2024 have increased to $21.09 from $20.33 over the past 60 days. The company&#39;s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average being 21.5%. MTH&#39;s earnings are expected to rise 5.8% year over year in 2024.
PulteGroup is an Atlanta, GA-based homebuilder engaged in homebuilding and financial services businesses.
PHM&#39;s EPS estimates for 2024 have increased to $13.36 from $12.85 over the past 60 days. The company&#39;s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average being 10%. PHM&#39;s earnings are expected to rise 14% year over year in 2024.
<a href="https://www.zacks.com/stock/news/2339343/lennar-q3-earnings-revenues-beat-stock-down-on-tepid-q4-view?cid=CS-BENZ-FT-analyst_blog|earnings_article-2339343">To read this article on Zacks.com click here.</a>

Lennar Q3 Earnings & Revenues Beat, Stock Down on Tepid Q4 View

B of A Securities analyst Rafe Jadrosich maintains PulteGroup (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/PHM#NYSE">PHM</a>) with a Buy and raises the price target from $138 to $160.

B of A Securities Maintains Buy on PulteGroup, Raises Price Target to $160

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

ETFs

iShares Dow Jones US Homenstruction Index Fund

NAIL

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

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.

Analyst Color

AEHL

TGLS

TILE

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

WIIM

CJET

DENN

FRZA

GSUN

JZXN

LAZR

MGOL

PENN

PLBY

PTON

SERV

TDUP

VEEE

YOSH

ZAPP

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

CVCO

GRBK

LGIH

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.

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.

Reiteration

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>

Management

ACGL

UPBD

Buy 5 High ROE Stocks as Low Inflation Data Steadies Market

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.
<div class="chart_embed">
<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
</div>
<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>

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

Top homebuilder and housing stocks as mortgage rates fall

SA Chart: Which sector will benefit the most from interest rate cuts?

Dividend Champion, Contender, And Challenger Highlights: Week Of September 29

SA Asks: When will the Fed cut rates again?

Monthly Options Series: Earn A Potentially Consistent 10% Income (Oct. 2024)

Top 10 S&P 500 stock performers of Q3

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?

NAIL: Top 10 Holdings Remain Attractively Valued Relative To The S&P 500

The construction market is thriving, driven by its rising demand and shifting demographics. Thus, investors could consider buying leading construction stocks PulteGroup (PHM), NVR, Inc. (NVR), and Tri Pointe Homes (TPH) for solid gains. Keep on reading… With increasing population levels, urbanization, and shifting demographics boosting demand for new housing, the construction sector is expanding robustly. Additionally, a growing desire for modern, energy-efficient homes is growing, further accelerating the sector's expansion.
Therefore, with the industry's tailwinds, it could be wise to invest in fundamentally strong construction stocks like PulteGroup, Inc. (<a href="https://stocknews.com/stock/PHM/">PHM</a>), NVR, Inc. (<a href="https://stocknews.com/stock/NVR/">NVR</a>), and Tri Pointe Homes, Inc. (<a href="https://stocknews.com/stock/TPH/">TPH</a>) amid rising housing demand.
The construction sector is poised to benefit significantly from current market dynamics. With mortgage levels dropping to their <a href="https://www.forbes.com/advisor/mortgages/mortgage-rates/">lowest in nearly 15 months</a>, the demand for housing has been on the rise. Additionally, despite high interest rates, the Federal Reserve's interest rate cut last month will further boost the industry's growth prospects.
That said, privately-owned housing completions in July reached an annual rate of 1,529,000, marking <a href="https://www.census.gov/construction/nrc/pdf/newresconst.pdf">a 13.8% increase</a> from July 2023. Single-family housing completions were at a rate of 1,054,000, up 0.5% from the revised June rate of 1,049,000.
According to Statista, the residential real estate market in the United States is projected to reach a value of <a href="https://www.statista.com/outlook/fmo/real-estate/residential-real-estate/united-states">$106.70 trillion by 2024</a>. This projection shows a steady annual growth rate of 3.6% from 2024 to 2029, with an anticipated market volume of $127.40 trillion by 2029.
Considering all these factors, let us discuss the fundamentals of three <a href="https://stocknews.com/category/homebuilders/">Homebuilders</a> stocks, starting with number 3.
Stock #3: 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, along with upcoming townhomes and amenities.
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 <a href="https://www.investopedia.com/terms/n/netincome.asp">net income</a> 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 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 42.3% to close the last trading session at $142.97.
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 #5 out of 23 stocks in the <a href="https://stocknews.com/category/homebuilders/">Homebuilders</a> industry. PHM has an A grade for Momentum and a B for Quality.
To access PHM's grades for Growth, Sentiment, Value, and Stability, <a href="https://stocknews.com/stock/PHM/">click here</a>.
Stock #2: NVR, Inc. (<a href="https://stocknews.com/stock/NVR/">NVR</a>)
NVR is a homebuilder in the United States, operating 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.
On April 25, NVR announced the signing of an agreement with La Cité Development, a leading real estate development corporation, to add 180 units of single-family homes to a large-scale redevelopment of 32.94 acres in Poppleton, West Baltimore, for approximately $800 million.
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 revenue and EPS for the quarter ending September 2024 to increase by 7.1% and 5% year-over-year to $2.69 billion and $131.52, respectively. NVR surpassed Street EPS estimates in three of the trailing four quarters.
Over the past nine months, the stock has gained 38.7% to close the last trading session at $9,636.
NVR's solid 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 #4 in the Homebuilders industry.
<a href="https://stocknews.com/stock/NVR/">Click here</a> to see NVR's Growth, Value, and Stability ratings.
Stock #1: Tri Pointe Homes, Inc. (<a href="https://stocknews.com/stock/TPH/">TPH</a>)
TPH specializes in the construction and sale of single-family attached and detached homes. It sells its homes through its sales representatives and third-party brokers under six regional brands: Maracay, Pardee Homes, Quadrant Homes, Trendmaker Homes, Winchester Homes, and TRI Pointe Homes.
On September 11, TPH unveiled Alterra, a 62-home neighborhood located in Newcastle, Washington, where Eastside homebuyers will soon have the opportunity to purchase homes. With newer portfolios that are changing with ever-evolving customer preferences, TPH is staying on top of the homebuilder's industry and ensuring a stable growth prospect.
For its fiscal second quarter that ended June 30, 2024, TPH's total revenues increased 37.6% year-over-year to $1.14 billion. Its net income available to common stockholders came in at $118 million or $1.25 per share, indicating increases of 94.3% and 108.3% year-over-year, respectively. Additionally, the company's adjusted EBITDA came in at $216 million, increasing 66.2% year-over-year.
Street expects TPH's revenue and EPS for the fiscal third quarter ending September 2024 to increase by 27.3% and 41.7% year-over-year to $1.05 billion and $1.08, respectively. Additionally, it surpassed the EPS and revenue estimates in each of its trailing four quarters, which is excellent.
Over the past nine months, the stock has gained 31.3% to close the last trading session at $44.83.
It's no surprise that TPH has an overall rating of B, which equates to Buy in our proprietary rating system. It has an A grade for Momentum and a B for Value, Growth, and Sentiment. Out of 23 stocks in the same industry, it is ranked #3.
In addition to the POWR Ratings we've stated above, we also have TPH's ratings for Stability and Quality. Get all TPH ratings <a href="https://stocknews.com/stock/TPH/">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><div style="clear:both;"></div> <h2>About the Author: Anushka Dutta</h2> <img src='https:/wp-content/uploads/2021/08/Anushka-Dutta_Headshot_3.jpg' style="float:left; padding:5px;width:125px;">Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.<a href="https://stocknews.com/authors/?author=anushka-dutta">More...</a>The post <a href=https://stocknews.com/news/nvr-phm-tph-3-construction-stocks-to-buy-for-the-housing-market-surge/>3 Construction Stocks to Buy for the Housing Market Surge</a> appeared first on <a href=https://stocknews.com/>StockNews.com</a>

3 Construction Stocks to Buy for the Housing Market Surge

AGNC

ALLE

AMAT

AVGO

BLDR

BPOP

CADE

CBRE

CFFI

CHCO

CHRW

CLPR

CMCSA

CMCT

CSCO

CTBI

CUBE

ERIE

ESRT

FFIN

FISI

FMAO

FULT

FUNC

GAIN

HBNC

HLNE

HWBK

INDB

INGR

INVH

JBGS

LRCX

MBIN

MORN

NXRT

ODFL

PGRE

PLTR

RDFN

RGLD

SCVL

SFBS

SFNC

SPTN

SPXU

STLD

SWBI

SYBT

THFF

TREE

TTEK

UBSI

UMBF

UPRO

UTMD

VICI

WASH

WSBC

XLRE

Press Releases

PulteGroup Breaks Ground on New Master-Planned Ryehill Communities in Sugar Land

Pulte Homes Announces First Utah Community in More than Twenty Years

PulteGroup CFO Bob O'Shaughnessy Announces Plan to Retire in 2025

PulteGroup Reports Second Quarter 2024 Financial Results

PulteGroup, Inc. Names New Chief Information Officer

PulteGroup Honors Two Veterans with New Mortgage-Free Homes in Orlando

PulteGroup's Third Quarter 2024 Earnings Release and Webcast Conference Call Scheduled for October 22, 2024

Del Webb Heartwood in Savannah Area Introduces 55+ Amenity-Rich Lifestyle to Georgia's Coast

PulteGroup Announces Quarterly Cash Dividend of $0.20 Per Share

United Homes Group Announces Executive Leadership Changes

TopBuild

Beazer Homes USA

Century Communities

Cavco Indus

Dream Finders Homes, Inc. Class A Common Stock

Dream Finders Homes

D.R. Horton

Green Brick Partners

Hovnanian Enterprises, Inc. Class A Common Stock

Hovnanian Enterprises

Installed Building Products, Inc. Common Stock

Installed Building Prods

KB Home

Legacy Housing Corporation - Common Stock

Legacy Housing

Lennar

Lennar Corporation Class B

LGI Homes

Lead Real Estate Co., Ltd - American Depositary Shares

Lead Real Estate Co

Top Stock Ideas Sent Daily — Join and Gain Your Edge

Top Stock Ideas Sent Daily — Join and Gain Your Edge

Comments

PulteGroup

PulteGroup (PHM) Forecast

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