PulteGroup Reports Narrower Loss as Homebuilder Lowers Costs
PulteGroup Inc. (PHM), the largest U.S. homebuilder by revenue, rose the most in four months after reporting a narrower first-quarter loss as it reduced costs and sold houses at higher prices.
The loss was $11.7 million, or 3 cents a share, compared with a loss of $39.5 million, or 10 cents, a year earlier, the Bloomfield Hills, Michigan-based company said today in a statement. The average estimate of 20 analysts in a Bloomberg survey was for a loss of 3 cents a share.
PulteGroup, which has reported a loss in six of the last seven quarters, has been focused about cutting costs after the acquisition of Centex Corp. in August 2009. It has been reducing overhead and staff, combining divisions, and concentrating on selling out of older, less profitable communities without being “overly aggressive” in opening new ones, said Megan McGrath, an analyst with MKM Partners LLC in Greenwich, Connecticut.
“The results top to bottom are solid and put PHM in good position for the rest of the year,” Stephen East, an analyst with International Strategy & Investment Group LLC, wrote in a note to clients.
PulteGroup climbed 10 percent to $9.58 at the close of trading in New York, the most since Dec. 20.
The company’s first-quarter revenue from home sales rose 4 percent from a year earlier to $814 million, driven by an increase in prices. The average selling price climbed 5 percent to $261,000, representing a shift toward sales of move-up houses that are more expensive. Closings fell 1 percent to 3,117 homes.
Orders rose 15 percent to 4,991 homes. The company’s backlog, a sign of future revenue, increased 12 percent to 5,798 homes with a value of $1.6 billion.
“It was the first quarter in several years that fundamental demand came in stronger than expected, allowing us to beat our forecast for the period,” Chief Executive Officer Richard Dugas said during a conference call with analysts. “We are pleased with how the year has started off, including a continuation of better sales activity thus far in April.”
The housing market has showed signs of stabilization in recent months as employment improves. Contracts to buy previously owned homes climbed 4.1 percent last month from February to the highest level in two years, the National Association of Realtors said today. New homes in the U.S. sold at an annual pace of 328,000 in March, up 7.5 percent from a year earlier, the Commerce Department said April 24. The median estimate in a Bloomberg News survey was a rate of 319,000.
D.R. Horton Inc., the largest U.S. homebuilder by volume, this week reported earnings that beat analyst estimates, its fifth straight quarter of profitability.
“It feels like the builders have hit bottom and now it’s a question of the trajectory of the slope upward,” David Goldberg, an analyst with UBS AG (UBSN) in New York, said yesterday in a telephone interview. “We have been relatively consistent in predicting a gradual recovery.”
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