Analysts were wrong about homebuilding stocks like PulteGroup; stock rose 2% after strong earnings.

From Nasdaq: 2024-07-23 14:07:00

Analysts initially took a bearish view on homebuilding stocks due to high mortgage rates and inflation, leading to price target reductions for D.R. Horton Inc. and Lennar Co. Despite this, PulteGroup Inc. stock saw a 2% increase following strong earnings, with revenue up 10% and home sale gross margins rising.

PulteGroup’s earnings reflect a 10% increase in revenue to $4.4 billion, with a 30 basis point rise in home sale gross margins challenging the inflation argument. Market demand in Florida and Texas has boosted net earnings per share by 19% to $3.83 and driven new orders up to 7,649 homes.

Future forecasts for PulteGroup stock are positive, with a rising backlog value and new orders indicating potential growth. Management’s $314 million buyback of stock at 97% of its 52-week high suggests an undervalued stock. PulteGroup’s 2.2x price-to-book ratio compared to competitors signals a 12.6-39.6% premium. Analysts at Evercore predict a 50.4% rally in PulteGroup stock.



Read more at Nasdaq:: Were Banks Wrong About the Fate of Stocks Like PulteGroup?