PulteGroup Inc (PHM, Financial) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at $98.75, PulteGroup Inc has witnessed a daily gain of 6.06%, marked against a three-month change of -15.34%. A thorough analysis, underlined by the GF Score, suggests that PulteGroup Inc is well-positioned for substantial growth in the near future.
Understanding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 9/10
- Profitability rank: 10/10
- Growth rank: 10/10
- GF Value rank: 6/10
- Momentum rank: 5/10
Each one of these components is ranked and the ranks also have positive correlation with the long-term performances of stocks. The GF score is calculated using the five key aspects of analysis. Through backtesting, we know that each of these key aspects has a different impact on the stock price performance. Thus, they are weighted differently when calculating the total score. With high ranks in financial strength, profitability, and growth, GuruFocus assigned PulteGroup Inc the GF Score of 96 out of 100, which signals the highest outperformance potential.
Understanding PulteGroup Inc's Business
PulteGroup Inc is a prominent homebuilder in the United States, primarily focusing on constructing single-family detached homes. The company caters to a diverse range of buyers, including entry-level, move-up, and active-adult segments. Additionally, PulteGroup Inc offers mortgage financing, title, and insurance agency services through its financial services segment. With a market cap of $19.91 billion and sales amounting to $17.95 billion, the company maintains an operating margin of 21.67%, reflecting its efficient operations and strong market presence.
Financial Strength Breakdown
According to the Financial Strength rating, PulteGroup Inc's robust balance sheet exhibits resilience against financial volatility, reflecting prudent management of capital structure. The Interest Coverage ratio for PulteGroup Inc stands impressively at 8,120.87, underscoring its strong capability to cover its interest obligations. This robust financial position resonates with the wisdom of legendary investor Benjamin Graham, who favored companies with an interest coverage ratio of at least 5.
With an Altman Z-Score of 5.69, PulteGroup Inc exhibits a strong defense against financial distress, highlighting its robust financial stability. With a favorable Debt-to-Revenue ratio of 0.13, PulteGroup Inc's strategic handling of debt solidifies its financial health.
Profitability Rank Breakdown
The Profitability Rank shows PulteGroup Inc's impressive standing among its peers in generating profit. PulteGroup Inc's Operating Margin has increased by 36.92% over the past five years, as shown by the following data: 2020: 15.83; 2021: 18.62; 2022: 21.51; 2023: 21.15; 2024: 21.67.
Furthermore, PulteGroup Inc's Gross Margin has seen a consistent rise over the past five years, as evidenced by the data: 2020: 25.17; 2021: 27.53; 2022: 30.21; 2023: 29.38; 2024: 29.09. This trend underscores the company's growing proficiency in transforming revenue into profit. The Piotroski F-Score confirms PulteGroup Inc's solid financial situation based on Joseph Piotroski's nine-point scale, which measures a company's profitability, funding, and operating efficiency.
PulteGroup Inc's strong Predictability Rank of 5.0 stars out of five underscores its consistent operational performance, providing investors with increased confidence.
Growth Rank Breakdown
Ranked highly in Growth, PulteGroup Inc demonstrates a strong commitment to expanding its business. The company's 3-Year Revenue Growth Rate is 17.4%, which outperforms better than 83.15% of 89 companies in the Homebuilding & Construction industry.
Moreover, PulteGroup Inc has seen a robust increase in its earnings before interest, taxes, depreciation, and amortization (EBITDA) over the past few years. Specifically, the three-year growth rate stands at 25.3, and the rate over the past five years is 32.2. This trend accentuates the company's continued capability to drive growth.
Conclusion: PulteGroup Inc's Path to Market Leadership
With its strong financial strength, impressive profitability, and robust growth metrics, PulteGroup Inc's GF Score highlights the firm's unparalleled position for potential outperformance. The company's strategic initiatives, coupled with its solid financial foundation, make it a compelling choice for value investors seeking long-term growth opportunities. As the homebuilding industry continues to evolve, PulteGroup Inc's commitment to innovation and market leadership positions it well for future success.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
