Updated Aug 6 at 2:35pm ET.
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PulteGroup is opening a new division focused on Northwest Florida, a region where it sees high demand for new homes. Florida has been a major growth engine for the company, and this move allows it to scale its operations in a market that has remained more resilient than other parts of the country.
Expanding into new regions is how a homebuilder grows its backlog, which is the total value of homes that are under contract but not yet finished. If the company can successfully replicate its high-margin model in the Panhandle, it should help support overall profits as other markets cool.
Source: Business Wire
PulteGroup reported earnings of $2.48 per share, which was better than the $2.36 analysts expected. While total profit fell compared to last year, the company saw a 6 percent jump in new orders. This suggests that even with higher mortgage rates, buyers are still showing up for new homes.
The company maintained a home sale gross margin of 25 percent, which is the portion of each sale left after paying for land and construction. Keeping this number high is a key part of our view on the stock, as it shows PulteGroup can manage its costs even when it has to offer incentives to attract buyers. The company also used about 373 million dollars to buy back its own shares, which increases the value of the remaining shares for long-term owners.
See the full quarter, and how our tracked metrics did
Source: 8-K filing
Analysts recently adjusted their price targets following the company's second-quarter earnings report. Most analysts are split, with 19 buys and 25 neutral or sell ratings, and the average target of $143 suggests a 10% gain from today's price.
Management has a long history of beating expectations, often by a wide margin. It shows they are good at managing their costs even when the housing market gets volatile.
| Expectation | |
|---|---|
| EPS | $2.66 |
| Revenue | $4.18B |
