We upgrade our recommendation to Outperform from Neutral on PulteGroup, Inc. (PHM), the largest builder of active communities in the U.S. Based in Bloomfield Hills, Michigan, Pulte is engaged in the homebuilding and financial services businesses primarily in the U.S. and Puerto Rico.
Pulte released its 2011 second quarter results on July 28, 2011. The company reported an adjusted loss of $14 million or 4 cents per share in the quarter compared with an adjusted income of $110 million or 29 cents per share a year ago.
Moreover, consolidated revenues slipped 29% to $927.2 million from $1.31 billion in the year-ago period. The decline in consolidated revenues was attributable to poor performance across all the company’s segments arising from lower demand and increased competition.
Despite losses in the last reported quarter, the company has great opportunities going forward. The acquisition of Dallas-based Centex Corporation in August 2009 has helped the company become the nation's largest homebuilder (by units), surpassing D.R. Horton Inc. (DHI).
The combined company caters to 59 markets, including 29 states and the District of Columbia. It also provides access to states like Texas, North Carolina and South Carolina, which have shown comparatively strong new home sales despite the housing slump.
Again, in order to increase the acceptability of its homes in the face of growing environmental concerns, Pulte has teamed up with Residential Energy Services Network (RESNET) to promote and construct energy-efficient homes through a two-year pilot program. These homes will help consumers save on their utility bills and reduce their carbon footprints.
Moreover, Pulte recently purchased 45 lots in the Clarkston region of Michigan from another homebuilder, observing the huge demand in the region. The decreasing inventory in the region has fueled demand for homes, thereby inspiring homebuilders to build homes again in the region. This purchase of lots by Pulte is the company’s first land purchase in the state in the last four years.
D R HORTON INC (DHI): Free Stock Analysis Report
PULTE GROUP ONC (PHM): Free Stock Analysis Report
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