Today we're going to take a closer look at large-cap Consumer Discretionary company Pulte, whose shares are currently trading at $76.73. We've been asking ourselves whether the company is under or over valued at today's prices... let's perform a brief value analysis to find out!
Pulte Has Attractive P/B and P/E Ratios:
PulteGroup, Inc., through its subsidiaries, primarily engages in the homebuilding business in the United States. The company belongs to the Consumer Discretionary sector, which has an average price to earnings (P/E) ratio of 22.33 and an average price to book (P/B) ratio of 3.12. In contrast, Pulte has a trailing 12 month P/E ratio of 6.4 and a P/B ratio of 1.74.
Pulte's PEG ratio is 1.24, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.
An Exceptionally Strong Balance Sheet:
| 2018-02-07 | 2019-01-31 | 2020-01-30 | 2021-02-02 | 2022-02-07 | 2023-02-06 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $8,573 | $10,188 | $10,213 | $11,036 | $13,927 | $16,229 |
| Gross Margins | 23.0% | 25.0% | 25.0% | 27.0% | 28.0% | 31.0% |
| Operating Margins | 11% | 13% | 13% | 16% | 18% | 21% |
| Net Margins | 5.0% | 10.0% | 10.0% | 13.0% | 14.0% | 16.0% |
| Net Income (MM) | $447 | $1,022 | $1,017 | $1,407 | $1,946 | $2,617 |
| Earnings Per Share | $1.46 | $3.59 | $3.69 | $5.22 | $7.52 | $10.07 |
| EPS Growth | n/a | 145.89% | 2.79% | 41.46% | 44.06% | 33.91% |
| Diluted Shares (MM) | 307 | 285 | 275 | 269 | 259 | 260 |
| Free Cash Flow (MM) | $695 | $1,507 | $1,134 | $1,843 | $1,077 | $781 |
| Capital Expenditures (MM) | -$32 | -$59 | -$58 | -$58 | -$73 | -$113 |
| Net Current Assets (MM) | n/a | n/a | n/a | n/a | $5,994 | $7,258 |
| Long Term Debt (MM) | n/a | n/a | n/a | n/a | $2,655 | $2,632 |
Pulte has exceptional EPS growth and an excellent current ratio. Additionally, the company's financial statements display healthy debt levels and average operating margins with a positive growth rate. However, the firm has slimmer gross margins than its peers. Finally, we note that Pulte has weak revenue growth and a flat capital expenditure trend and irregular cash flows.
