Pulte Group (PHM) recently made the Zacks.com list of most sought-after stocks. Therefore, you may want to consider some of the key factors that could influence the stock’s performance in the near future.

Shares of this homebuilder have returned +2.5% over the past month, compared to the +5.4% change in the Zacks S&P 500 composite. The Zacks Building Products – Home Builders industry, to which PulteGroup gained 0.5% over this period. Now the key question is: where could the stock be headed in the near term?

While press releases or rumors about a substantial change in a company’s business prospects usually move its stock and lead to an immediate price change, there are always fundamental facts that end up dominating a company’s decision-making. purchase and storage.

Earnings Estimate Revisions

At Zacks, we prioritize evaluating the change in a company’s future earnings projection above anything else. Indeed, we believe that the present value of its future earnings streams is what determines the fair value of its shares.

We essentially look at how the sell-side analysts covering the stock are revising their earnings estimates to reflect the impact of the latest business trends. And if earnings estimates rise for a company, the fair value of its shares rises. A fair value above the current market price attracts investor interest in purchasing the stock, causing its price to rise. This is why empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For the current quarter, PulteGroup is expected to post earnings of $3.10 per share, a change of +6.9% from the year-ago quarter. The Zacks Consensus Estimate has remained unchanged over the past 30 days.

The consensus earnings estimate of $13.36 for the current fiscal year indicates a year-over-year change of +14%. This estimate has remained unchanged over the past 30 days.

For the next fiscal year, the consensus earnings estimate of $13.58 indicates a +1.7% change from what PulteGroup was expected to report a year ago. Over the past month, the estimate has remained unchanged.

Backed by a strong external audit history, our proprietary stock rating tool, the Zacks Rank, provides a more conclusive picture of a stock’s near-term price direction because it effectively harnesses the power of revisions to earnings estimates. Due to the size of the recent change in the consensus estimate, as well as three other factors related to earnings estimates, PulteGroup carries a Zacks Rank #3 (Hold).

The story continues

The chart below shows the change in the company’s 12-month consensus EPS estimate:

12-month EPS

Revenue Growth Forecast

While a company’s earnings growth is arguably the best indicator of its financial health, not much happens if it can’t grow its revenue. It is almost impossible for a company to grow profits without increasing revenue for long periods of time. It is therefore crucial to know a company’s potential revenue growth.

For PulteGroup, the consensus sales estimate for the current quarter of $4.26 billion indicates a year-over-year change of +6.4%. For the current and upcoming fiscal years, the estimates of $17.43 billion and $18.35 billion indicate changes of +8.5% and +5.3%, respectively.

Latest reported results and history of surprises

PulteGroup reported revenue of $4.6 billion in the most recent reported quarter, representing a year-over-year change of +9.8%. EPS of $3.58 for the same period, compared to $3 a year ago.

Compared to the Zacks Consensus Estimate of $4.48 billion, the reported earnings came as a surprise of +2.72%. The EPS surprise was +11.53%.

The company has beaten consensus EPS estimates in each of the last four quarters. The company topped consensus revenue estimates twice during that period.

Assessment

Without considering the valuation of a stock, no investment decision can be effective. To predict the future performance of a stock’s price, it is crucial to determine whether its current price correctly reflects the intrinsic value of the underlying business and the company’s growth prospects.

By comparing the current values ​​of a company’s valuation multiples, such as price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF), with its Own historical values ​​help determine whether its stock is fairly valued, overvalued or undervalued, comparing the company against its peers on these metrics gives a good idea of ​​whether the stock price is reasonable.

As part of the Zacks Style Scores system, the Zacks Value Style Score (which evaluates both traditional and unconventional valuation metrics) organizes stocks into five groups ranging from A to F (A is better than B; B is better that C; and so on), which makes it possible to identify whether a stock is overvalued, correctly valued or temporarily undervalued.

PulteGroup is rated B on this front, indicating that it is trading at a discount to its peers. Click here to see the values ​​of some of the valuation metrics that led to this rating.

Conclusion

The facts discussed here and plenty of other information on Zacks.com could help determine whether it’s worth paying attention to the market buzz surrounding PulteGroup. However, its Zacks Rank #3 suggests that it could move in line with the broader market in the near term.

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