Core Viewpoint - PulteGroup is well-positioned to continue its earnings-beat streak, with a history of surpassing earnings estimates and a positive earnings outlook [1][5]. Earnings Performance - For the most recent quarter, PulteGroup reported earnings of $3.50 per share, exceeding the expected $3.24 per share, resulting in a surprise of 8.02% [2]. - In the previous quarter, the company reported $3.35 per share against an expectation of $3.10 per share, achieving a surprise of 8.06% [2]. Earnings Estimates and Predictions - There has been a favorable change in earnings estimates for PulteGroup, with a positive Earnings ESP of +0.27%, indicating bullish sentiment among analysts regarding its near-term earnings potential [5][8]. - The combination of a positive Earnings ESP and a Zacks Rank of 3 (Hold) suggests a high likelihood of another earnings beat, with historical data showing that such combinations lead to positive surprises nearly 70% of the time [6][8]. Earnings ESP Explanation - The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate, with the Most Accurate Estimate reflecting the latest analyst revisions, which may be more accurate than earlier predictions [7]. - A negative Earnings ESP can reduce predictive power but does not necessarily indicate an earnings miss [9]. Importance of Earnings ESP - Companies often beat consensus EPS estimates, but this is not the sole reason for share price gains; thus, checking a company's Earnings ESP before quarterly releases is crucial for investment decisions [10].

Core Viewpoint - The article discusses the reliability of brokerage recommendations, particularly focusing on PulteGroup (PHM), and highlights the potential misalignment of interests between brokerage analysts and retail investors [1][10]. Brokerage Recommendation Summary - PulteGroup has an average brokerage recommendation (ABR) of 1.81, indicating a position between Strong Buy and Buy, based on recommendations from 16 brokerage firms [2]. - Out of the 16 recommendations, nine are classified as Strong Buy and one as Buy, which represent 56.3% and 6.3% of the total recommendations, respectively [2]. Analysis of Brokerage Recommendations - The article suggests that relying solely on brokerage recommendations may not be advisable, as studies indicate these recommendations often do not effectively guide investors toward stocks with high price appreciation potential [5]. - Brokerage firms tend to exhibit a positive bias in their ratings due to vested interests, with a ratio of five "Strong Buy" recommendations for every "Strong Sell" [6][10]. Zacks Rank Comparison - Zacks Rank, a proprietary stock rating tool, categorizes stocks from Strong Buy to Strong Sell and is based on earnings estimate revisions, which have shown a strong correlation with near-term stock price movements [8][11]. - The Zacks Rank is updated more frequently than the ABR, making it a more timely indicator of future price movements [12]. Current Earnings Estimates for PulteGroup - The Zacks Consensus Estimate for PulteGroup's earnings for the current year remains unchanged at $12.32, suggesting stable analyst views on the company's earnings prospects [13]. - Due to the unchanged consensus estimate and other factors, PulteGroup holds a Zacks Rank of 3 (Hold), indicating a cautious approach despite the Buy-equivalent ABR [14].

Core Viewpoint - Analysts expect PulteGroup to report a quarterly earnings of $2.48 per share, reflecting a year-over-year decline of 13.6% and revenues of $3.86 billion, down 2.2% from the previous year [1] Financial Projections - Homebuilding - Home sale revenues are projected to reach $3.74 billion, indicating a year-over-year change of -2.2% [4] - Revenues from Financial Services are expected to be $91.12 million, suggesting a change of -1.3% year over year [4] - Homebuilding revenues are forecasted to be $3.77 billion, reflecting a -2.2% change from the prior-year quarter [4] Additional Revenue Insights - Homebuilding - Land sale revenues are estimated at $36.85 million, indicating a -1% change from the prior-year quarter [5] - The Average Selling Price - Total is projected to be $561.97, compared to $538 from the year-ago figure [5] - Net New Orders in Units - Total is expected to be 8,598, up from 8,379 year-over-year [5] Backlog and Closings - Unit Backlog - Total is estimated at 12,103, down from 13,430 year-over-year [6] - Closings (units) - Total is projected to reach 6,648, compared to 7,095 from the previous year [6] - Active Communities are expected to total 964, up from 931 year-over-year [6] Order and Value Estimates - Net New Orders (Value) - Total is projected to be $4.95 billion, compared to $4.70 billion in the same quarter last year [7] - Backlog Value - Total is expected to reach $7.70 billion, down from $8.20 billion year-over-year [7] Income Projections - Income / (loss) before income taxes - Homebuilding is estimated at $636.19 million, contrasting with the year-ago figure of $827.66 million [8] Stock Performance - Over the past month, shares of PulteGroup have returned -8.4%, while the Zacks S&P 500 composite has changed -4.2% [8] - PulteGroup currently holds a Zacks Rank 2 (Buy), indicating potential outperformance in the near future [8]

Company Overview - PulteGroup (PHM) closed at $94.53, reflecting a +0.91% change from the previous day, underperforming the S&P 500's gain of 1.81% [1] - Over the last month, PulteGroup's shares decreased by 7.33%, which is better than the Construction sector's loss of 7.59% but worse than the S&P 500's loss of 6.14% [1] Upcoming Financial Results - PulteGroup is set to announce its earnings on April 22, 2025, with projected earnings of $2.48 per share, indicating a year-over-year decline of 13.59% [2] - The consensus estimate for revenue is $3.86 billion, reflecting a 2.16% decrease from the same quarter last year [2] Annual Forecast - For the entire year, the Zacks Consensus Estimates predict earnings of $12.32 per share and revenue of $18.16 billion, representing changes of -16.13% and +1.18% respectively compared to the previous year [3] Analyst Estimates and Market Sentiment - Recent modifications to analyst estimates for PulteGroup are crucial as they reflect changing business trends, with positive revisions indicating a favorable outlook on the company's health and profitability [4] - The Zacks Rank system, which evaluates these estimate changes, currently rates PulteGroup at 4 (Sell) [6] Valuation Metrics - PulteGroup has a Forward P/E ratio of 7.6, which is higher than the industry average of 7, suggesting it is trading at a premium [7] - The company has a PEG ratio of 0.25, compared to the industry average PEG ratio of 0.86, indicating a potentially undervalued position relative to its growth prospects [7] Industry Context - The Building Products - Home Builders industry, part of the Construction sector, has a Zacks Industry Rank of 213, placing it in the bottom 15% of over 250 industries [8] - Research indicates that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [8]

Core Viewpoint - The article discusses the reliability of Wall Street analysts' recommendations, particularly focusing on PulteGroup (PHM), and emphasizes the importance of using these recommendations in conjunction with other indicators like the Zacks Rank for making informed investment decisions [1][5]. Brokerage Recommendations - PulteGroup has an average brokerage recommendation (ABR) of 1.81, indicating a consensus between Strong Buy and Buy, based on recommendations from 16 brokerage firms [2]. - Out of the 16 recommendations, nine are classified as Strong Buy and one as Buy, which represent 56.3% and 6.3% of the total recommendations, respectively [2]. Limitations of Brokerage Recommendations - Solely relying on brokerage recommendations may not be advisable, as studies indicate they often fail to guide investors effectively towards stocks with high price appreciation potential [5]. - Analysts from brokerage firms tend to exhibit a strong positive bias in their ratings due to vested interests, issuing five "Strong Buy" recommendations for every "Strong Sell" [6][10]. Zacks Rank as an Alternative - The Zacks Rank, a proprietary stock rating tool, categorizes stocks from Zacks Rank 1 (Strong Buy) to Zacks Rank 5 (Strong Sell) and is considered a more effective indicator of near-term stock price performance [8][11]. - The Zacks Rank is based on earnings estimate revisions, which are strongly correlated with stock price movements, providing a timely prediction of future stock prices [11][12]. Current Earnings Estimates for PulteGroup - The Zacks Consensus Estimate for PulteGroup's current year earnings remains unchanged at $12.32 over the past month, suggesting steady analyst views on the company's earnings prospects [13]. - Due to the recent changes in consensus estimates and other related factors, PulteGroup currently holds a Zacks Rank 3 (Hold), indicating a cautious approach despite the Buy-equivalent ABR [14].

Group 1 - Seaport Global analyst Kenneth Zener upgraded PulteGroup (PHM) from Sell to Neutral with a price forecast of $100, indicating a shift in investment sentiment towards the company [1] - Historical data shows that the sector has experienced a 41% decline over the past 21 cycles, with the upper half of stocks falling 24% and the lower half dropping 49%, suggesting a potential for asymmetric returns as the cycle turns [2] - The analyst anticipates a decline in new supply by 15%-20% in the first half of 2025, with current starts at 993k compared to a trough of 847k, indicating a potential acceleration in declines [3] Group 2 - PulteGroup reported fourth-quarter revenues of $4.92 billion, exceeding the consensus estimate of $4.635 billion, and adjusted EPS of $3.50, beating the consensus estimate of $3.27 [4] - Investors can gain exposure to PulteGroup through iShares U.S. Home Construction ETF (ITB) and SPDR Series Trust Homebuilders ETF (XHB) [4] - As of the last check, PHM shares increased by 0.74% to $106.76 [4]

Company Performance - PulteGroup (PHM) ended the latest trading session at $102.90, reflecting a +0.85% adjustment from the previous day's close, outperforming the S&P 500 which lost 1.22% [1] - Over the past month, PulteGroup shares have declined by 6.52%, which is worse than the Construction sector's loss of 6.27% and the S&P 500's loss of 2.31% [1] Upcoming Earnings Report - PulteGroup is scheduled to release its earnings report on April 22, 2025, with projected earnings of $2.48 per share, indicating a year-over-year decline of 13.59% [2] - The consensus estimate for revenue is $3.89 billion, representing a 1.55% decrease from the same quarter last year [2] Full-Year Estimates - The full-year Zacks Consensus Estimates for PulteGroup are earnings of $12.32 per share and revenue of $18.16 billion, reflecting year-over-year changes of -16.13% and +1.17%, respectively [3] Analyst Forecast Revisions - Recent revisions to analyst forecasts for PulteGroup are important as they reflect short-term business trends, with upward revisions indicating analysts' positive outlook on the company's operations [4] Zacks Rank and Valuation - PulteGroup currently holds a Zacks Rank of 4 (Sell), with a recent downward shift of 2.22% in the Zacks Consensus EPS estimate [6] - The company has a Forward P/E ratio of 8.28, which is a premium compared to the industry's average Forward P/E of 7.84 [6] Industry Context - The Building Products - Home Builders industry, part of the Construction sector, has a Zacks Industry Rank of 227, placing it in the bottom 10% of over 250 industries [8] - Research indicates that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [8]

Core Insights - PulteGroup Inc. is expanding its Del Webb brand with the launch of Del Webb Explore, targeting a broader demographic beyond the traditional 55-plus age group to include Gen X buyers [1][2][5] Group 1: Target Market and Community Features - Del Webb Explore is specifically designed for Gen X consumers aged 45-60, who desire a luxurious lifestyle without age restrictions [2] - Research indicates that 40% of potential Del Webb buyers are interested in the brand's active lifestyle but do not meet the age criteria, highlighting a significant market opportunity [2] - The new communities will feature high-end amenities such as state-of-the-art clubhouses, premium fitness centers, and zero-entry lagoon pools, catering to Gen X preferences for social and wellness-oriented lifestyles [3] Group 2: Strategic Growth and Market Expansion - The first Del Webb Explore communities are launching in Southern California and the Tampa Bay Area, with plans for nationwide expansion, starting with the Palm Desert community covering 71 acres and 332 units [4] - This strategic move allows PulteGroup to leverage its historical success in high-demand markets while diversifying its brand [4][5] Group 3: Financial Performance and Stock Outlook - PulteGroup's stock has experienced a decline of 20.5%, outperforming the Zacks Building Products - Home Builders industry's 26.7% decline [7] - The company's earnings per share (EPS) estimate for 2025 has decreased to $12.32 from $13.34, indicating a projected growth of 16.1% from 2024 [9] - PulteGroup is facing challenges due to affordability issues in the housing market, exacerbated by high mortgage rates, which are impacting margins [10]

Homebuilding Operations - Homebuilding operations generated 98% of consolidated revenues, totaling $17.9 billion in 2024, $16.1 billion in 2023, and $16.0 billion in 2022[11] - Home closings increased to 31,219 in 2024 from 28,603 in 2023, reflecting a growth of approximately 5.7%[11] - The average selling price of homes rose to $555,000 in 2024, up from $545,000 in 2023, indicating a year-over-year increase of 1.8%[12] - A total of 31,219 homes were delivered in 2024, an increase from 28,603 homes in 2023 and 29,111 homes in 2022[11] - Backlog at December 31, 2024, was $6.5 billion (10,153 units), down from $7.3 billion (12,146 units) at December 31, 2023[23] - 40% of home closings in 2024 were to first-time buyers, reflecting a slight increase from 2023[18] Market Position and Competition - The company holds approximately 4% market share of U.S. new home sales in 2024, competing with numerous national, regional, and local homebuilders[28] - The U.S. housing market is highly competitive, with the company holding approximately 4% market share of new home sales in 2024[28] Financial Performance - The company aims to enhance shareholder value through operational gains, asset efficiency, and maintaining a modest leverage profile[14] - The company aims to enhance shareholder value by driving operational gains, increasing market share, and managing capital effectively[13][14] - The company originated mortgage loans for 63% of the homes closed in 2024, compared to 61% in 2023 and 62% in 2022[33] - Cash buyers represented 21% of home closings in 2024, up from 22% in 2023 and 18% in 2022[33] Operations and Management - The company controlled 234,589 lots as of December 31, 2024, with 102,176 owned and 132,413 under land option agreements[16] - The construction process is primarily conducted by independent subcontractors, ensuring quality through selective partnerships[24] - The company utilizes land option agreements to manage risks and enhance expected returns on land investments[15] - The company employs 6,793 people as of December 31, 2024, with 1,094 in Financial Services operations[40] - The average tenure of the executive team is 16 years, indicating strong leadership continuity[45] Regulatory Environment - The company is subject to extensive regulations impacting site selection, development, and construction activities[30] - The company is subject to government regulations affecting its mortgage banking business, impacting both mortgage and homebuilding operations[36] Risk Management - The company has not experienced significant claims related to its title operations historically[38] - The company has not experienced significant claims related to its title insurance operations historically[38] - The company faces challenges in sourcing qualified labor and materials, impacting construction costs and timelines[27] Customer Focus and Innovation - Energy efficiency is a key focus in home designs, incorporating features like high-efficiency HVAC systems and solar power in certain areas[19] - The company utilizes in-house mortgage and title operations to provide a competitive advantage and align financing with home construction needs[32] - The company utilizes a centralized fulfillment center for mortgage operations, improving speed, efficiency, and profitability[35] Corporate Culture and Leadership - The company emphasizes diversity and ethical behavior in its workplace culture, which is critical to its success[44] - The company offers competitive compensation and benefits, including a 401(k) retirement plan and performance-based incentives[42] - The company plans to promote Mr. Ossowski to Chief Financial Officer effective February 7, 2025, following Mr. O'Shaughnessy's retirement[50]

Company Overview - PulteGroup, Inc. is one of the largest homebuilders in the United States, operating several well-known brands including Centex, Del Webb, and Pulte Homes [1] Investment Strategy - BAD BEAT Investing, led by Quad 7 Capital, focuses on short- and medium-term investments, income generation, special situations, and momentum trades [1] - The team consists of 7 analysts with diverse expertise, sharing investment opportunities and emphasizing education for investors to become proficient traders [1] Performance and Track Record - Quad 7 Capital is recognized for its February 2020 call to sell everything and go short, maintaining an average position of 95% long and 5% short since May 2020 [1] - The group aims to provide in-depth, high-quality research with clear entry and exit targets, showcasing a proven track record of success [1]