Tags: PHM | Pulte Group | homebuilders | housing | stocks

PulteGroup Sees Better Times Ahead

By    |   Friday, 10 Jun 2011 02:56 PM

Being a home builder is tough enough these days. Builder PulteGroup (PHM) has been getting hammered by the economy, and the sector is not in good shape. Home prices in 20 U.S. cities fell in March to the lowest level since 2003, according to the S&P/Case-Shiller index of property values. Those weak housing numbers are reflecting in Pulte's earnings.

First-quarter revenue hit $805.2 million, down 21 percent from the same quarter in 2010. Money from homebuilding and financial services took a pounding. Pulte reported a net loss of $39.5 million, or 10 cents per share, compared with a loss of $12.5 million, or 3 cents per share, during the same period in 2010.

But things could be turning around. First quarter revenue did exceed some analysts' expectations, and a combination of cost-cutting and rising demand could push Pulte back in the black this year.

The company says that during the first quarter of this year net new home orders totaled 4,345, a hefty 43 percent increase from the fourth quarter of 2010 and up from the 4,320 reported in the first quarter of last year.

"We are encouraged by traffic and orders within the quarter, which showed sequential increases from month-to-month, while we exceeded internal forecasts for the period on key business drivers including net new home orders and margins," says company CEO Richard J. Dugas, Jr.

"An improving economy is slowly beginning to generate new jobs, which over the long term should translate into stronger consumer confidence, both of which are critical to a meaningful and sustained recovery in the U.S. housing industry."

Stiff competition

That doesn't mean the company is free from hurdles. The housing industry will continue to deal with weak demand, and competition for any sliver of business out there will be stiff, although Dugas predicted profitability by the second half.

Analysts tracked by Thompson/First Call have a median target of $9 on the stock, a 28 percent premium over recent trading action.

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Being a home builder is tough enough these days. Builder PulteGroup (PHM) has been getting hammered by the economy, and the sector is not in good shape. Home prices in 20 U.S. cities fell in March to the lowest level since 2003, according to the S P/Case-Shiller index of...
PHM,Pulte Group,homebuilders,housing,stocks
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Friday, 10 Jun 2011 02:56 PM
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