PulteGroup’s Stock Struggles Despite Strong Earnings Report
Homebuilding Giant Faces Tough Competition and Rising Costs
Atlanta-based PulteGroup, Inc. (PHM) is a major player in homebuilding, with a market cap of $21.8 billion. The company constructs and sells homes, develops residential land, and builds active adult communities. Additionally, PulteGroup offers mortgage financing, title insurance, and other services to home buyers.
Over the past year, PulteGroup’s shares have lagged behind the market. PHM stock has only increased by 3.5%, whereas the S&P 500 Index ($SPX) has surged nearly 22.3%. As of 2025, PHM’s stock is down 1.4%, contrasting with a 4% rise for the SPX year-to-date.
When looking at the homebuilding sector, the underperformance of PHM is even more evident. The SPDR S&P Homebuilders ETF (XHB) has gained approximately 7.6% in the past year. Furthermore, the ETF’s year-to-date growth of 2.1% is notably better than the declines of PulteGroup’s stock during the same period.
Several issues contribute to PulteGroup’s slower performance. Builders are increasing incentives to attract buyers due to elevated mortgage rates, strong competition, limited affordability, and rising home prices. These factors are discouraging many potential buyers, particularly first-time homebuyers. Additional concerns arise from increasing construction costs and uncertainties stemming from trade and immigration policies during the Trump administration, which could impact builder profits.
On January 30, PulteGroup’s shares rose over 4% following a successful Q4 earnings report. The company reported earnings per share (EPS) of $4.43, a 35.1% year-over-year increase. Its revenue also exceeded expectations, coming in at $4.9 billion compared to analyst forecasts of $4.7 billion.
Looking ahead to fiscal 2025, which ends in December, analysts predict that EPS for PulteGroup will decline by 7.2% to $12.32 on a diluted basis. However, the company has a strong history of exceeding earnings expectations, having topped analyst estimates in the last four quarters.
Among 16 analysts that cover PHM stock, the consensus rating is a “Moderate Buy.” This is based on nine “Strong Buy” ratings, one “Moderate Buy”, five “Hold” ratings, and one “Strong Sell.”
This outlook is more optimistic than two months prior when only seven analysts argued for a “Strong Buy.”
Analyst John Lovallo from UBS Group AG (UBS) reaffirmed a “Buy” rating on PHM with a price target of $151, suggesting a notable upside potential of 40.6% from the current price. The average price target sits at $135.03, indicating a 25.7% premium over the current stock value. The most optimistic target from the Street at $179 represents a potential upside of 66.6%.
On the date of publication, Neha Panjwani did not hold any positions in the securities mentioned in this article. All information and data in this article are meant for informational use only. For further information, please refer to the Barchart Disclosure Policy here.
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