PulteGroup Falls After Home-Order Growth Disappoints
PulteGroup Inc. (PHM), the largest U.S. homebuilder by market value, dropped after reporting order growth that fell short of some competitors.
Orders rose 27 percent in the fourth quarter, the Bloomfield Hills, Michigan-based company said today in a statement. Lennar Corp. (LEN), the second-biggest builder by market value, earlier this month reported a 32 percent increase for its most recent quarter, while D.R. Horton Inc., the third-largest, said two days ago it had a 39 percent jump.
Investors were disappointed that order growth trailed other builders and that PulteGroup projected a 10 percent to 15 percent decline in community count this year, said Joel Locker, an analyst with FBN Securities Inc. in New York. The company has been the best performer among U.S. homebuilders in the past year, with shares almost tripling.
“Pulte couldn’t meet lofty expectations,” Locker said in a telephone interview. “I don’t think sentiment could be higher in homebuilders. Investors expect significant earnings growth in the next few years to justify these stock prices.”
PulteGroup fell 1.5 percent to $20.74 at the close in New York, compared with a 0.2 percent decline in the 11-member S&P Supercomposite Homebuilding Index.
Net income for the fourth quarter was $58.7 million, or 15 cents a share, compared with $13.8 million, or 4 cents, a year earlier. The results included costs of $49 million, or 13 cents a share, for potential future loan-repurchase obligations, and $32 million, or 8 cents, tied to the repurchase of senior notes, PulteGroup said. These were partially offset by an income-tax benefit of $8 million, or 2 cents a share.
The average estimate of 19 analysts in a Bloomberg survey was for net income of 31 cents a share. Earnings per share were 34 cents excluding one-time expenses, Stephen East, an analyst at International Strategy & Investment Group in Saint Charles, Missouri, said in a note to clients.
Revenue rose to $1.57 billion from $1.26 billion. Backlog, an indication of future revenue, jumped 82 percent to $1.9 billion.
While the order growth trailed that of some peers, it reflected a 4 percent decline in communities, David Goldberg, an analyst with UBS AG in New York, wrote in a note to clients.
Demand for new houses is rising as inventories of existing properties tighten and mortgage rates hover near record lows. U.S. new-home sales jumped 20 percent last year to the highest since 2009. U.S. housing starts climbed last year to the fastest rate since 2008, according to Commerce Department data.
“We have every reason to expect that housing has indeed turned the corner and that industry sales in 2013 can continue to move higher as pent-up demand is released,” PulteGroup Chairman and Chief Executive Officer Richard Dugas said on a conference call with analysts.
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