Why Is PulteGroup (PHM) Down 3.8% Since Last Earnings Report?

Core Viewpoint - PulteGroup reported strong Q3 2024 earnings and revenues, exceeding estimates and showing year-over-year growth, despite a recent decline in share price [2][6]. Financial Performance - Earnings per share were $3.35, surpassing the Zacks Consensus Estimate of $3.10 by 8.1% and increasing 16% from $2.90 a year ago [6]. - Total revenues reached $4.48 billion, exceeding the consensus mark of $4.26 billion by 5.1% and up 12% from $4 billion in the previous year [6]. Operational Highlights - The company successfully executed a balanced spec and build-to-order model, benefiting from a structural shortage of homes due to years of underbuilding [3]. - Home closings increased by 12% year over year to 7,924 units, with an average selling price of homes delivered at $548,000, nearly unchanged from the previous year [8]. Segment Analysis - Homebuilding segment revenues rose 12% year over year to $4.3 billion, driven by increased home sales, while land sale revenues decreased [7]. - Financial Services segment revenues surged 48.4% year over year to $113.8 million, with pretax income increasing 90% to $55 million [11]. Investment and Returns - PulteGroup invested approximately $1.4 billion in its business during the quarter and returned over $360 million to shareholders, achieving a return on equity of 27% over the past 12 months [4]. Market Outlook - The Federal Reserve's decision to lower interest rates in late September is expected to positively impact the homebuilding industry, addressing affordability challenges for homebuyers [5]. - For Q4 2024, PulteGroup anticipates closing between 7,900 and 8,300 homes, with an expected average selling price of $555,000 to $565,000 [15]. Guidance and Projections - The company projects nearly 31,000 home closings for 2024, with a gross margin of approximately 29% and SG&A expenses between 9.2% and 9.5% of home sales [16]. - The backlog of orders decreased by 10.8% year over year to 12,089 units, with potential housing revenues from the backlog down to $7.69 billion from $8.13 billion [9].