PulteGroup to Report Q4 Earnings: What's in Store for the Stock?

Core Viewpoint - PulteGroup Inc. is expected to report its fourth-quarter 2024 results on January 30, with positive earnings and revenue growth anticipated despite challenges in the housing market [1][2]. Revenue Expectations - The Zacks Consensus Estimate for PulteGroup's fourth-quarter EPS has risen to $3.21, reflecting a 2.1% decrease from the previous year's EPS of$ 3.28, while revenue is projected at $4.66 billion, indicating an 8.6% year-over-year growth [3]. - The company's revenue growth is attributed to a balanced operating model, mortgage rate buydown programs, and favorable home pricing, despite higher mortgage rates and affordability challenges [4]. Home Closings and Pricing - PulteGroup anticipates home closings to be between 7,900 and 8,300 units, an increase from 7,615 units a year ago, with a model prediction of 8,012 units, representing a 5.2% year-over-year growth [5]. - The average selling price (ASP) for homes is expected to be between$ 555,000 and $565,000, up from$ 547,000 a year ago, with a model prediction of a 2.3% increase to $559,500 [6]. Segment Performance - Homebuilding revenues, which contributed 98% to total revenues in 2023, are expected to rise by 7.5% year-over-year to$ 4.51 billion, driven by higher home closings and ASP [7]. - Financial services revenues, contributing 2% to total revenues in 2023, are projected to increase by 4.4% year-over-year to $98 million [7]. Margin Analysis - PulteGroup is likely to experience margin pressure due to the need for incentives to address affordability concerns, with homebuilding gross margins expected to be in the range of 27.5% to 27.8%, down from 28.7% in the previous year [8][9]. Orders and Backlogs - The company expects net new orders to increase by 6% year-over-year to 6,586 units, while total backlog is anticipated to decline by 12.2% to 10,663 units, with the total backlog value decreasing by 5.6% year-over-year to$ 6.91 billion [11]. Earnings Prediction - The model predicts an earnings beat for PulteGroup, supported by a positive Earnings ESP of +2.36% and a Zacks Rank of 3 (Hold) [12][13].