Pulte shares fell by -6.3% during the day's afternoon session, and are now trading at a price of $135.15. Is it time to buy the dip? To better answer that question, it's essential to check if the market is valuing the company's shares fairly in terms of its earnings and equity levels.
a Lower P/B Ratio Than Its Sector Average but Trading Above Its Fair Price:
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 22.6 and an average price to book (P/B) ratio of 3.19. In contrast, Pulte has a trailing 12 month P/E ratio of 10.3 and a P/B ratio of 2.5.
Pulte's PEG ratio is 1.35, 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.
Growing Revenues and Generally Positive Cash Flows:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $10,188 | $10,213 | $11,036 | $13,737 | $16,003 | $16,062 |
| Net Margins | 10% | 10% | 13% | 14% | 16% | 16% |
| Net Income (M) | $1,022 | $1,017 | $1,407 | $1,946 | $2,617 | $2,602 |
| Net Interest Expense (M) | -$14 | -$9 | -$18 | -$2 | -$64 | $37 |
| Depreciation & Amort. (M) | $49 | $54 | $66 | $70 | $71 | $81 |
| Diluted Shares (M) | 280 | 271 | 268 | 260 | 236 | 221 |
| Earnings Per Share | $3.55 | $3.66 | $5.18 | $7.43 | $11.01 | $11.72 |
| EPS Growth | n/a | 3.1% | 41.53% | 43.44% | 48.18% | 6.45% |
| Avg. Price | $26.71 | $31.1 | $37.54 | $50.2 | $45.02 | $135.44 |
| P/E Ratio | 7.5 | 8.47 | 7.23 | 6.75 | 4.07 | 11.49 |
| Free Cash Flow (M) | $1,389 | $1,018 | $1,726 | $931 | $556 | $2,105 |
| CAPEX (M) | $59 | $58 | $58 | $73 | $113 | $92 |
Pulte has growing revenues and increasing reinvestment in the business, exceptional EPS growth, and generally positive cash flows.
