Pulte Homes is expected to report its eighth quarterly loss at market close today, but it's predicted to be smaller than that seen in past quarters.
Analysts are suggesting a $0.37 per share loss on average for the Bloomfield, Mich.-based company, but the range among the 14 analysts is wide, swinging from a predicted profit of $0.76 per share to a per-share loss of $1.27.
Pulte, unlike many of the public builders of late, actually ventured to give guidance for its third quarter earnings during its second quarter conference call in July, suggesting that earnings per share would range from a loss of $0.37 to break-even. But those numbers don't include any of the wild card expenses or earnings that have made predicting earnings more difficult in recent years--write-downs from devalued land, write-offs for abandoned land option contracts, or tax refunds from reduced earnings applied to past profits.
In the second quarter, Pulte lost $158.4 million, or $0.63 per share, and that included $220 million in impairments and land-related charges and a $56.8 million tax benefit.
While two years' worth of losses can't be pegged as a positive in anybody's estimation, in the current market that has builders hemorrhaging red ink each quarter, Pulte's losses and other metrics actually would earn the builder an "A" if graded on a curve.
That's a factor apparently baked into its stock price. While the rest of the S&P 500 has lost about a third of its value since the start of the year, Pulte's stock closed on Oct. 12 about even with its close at the end of 2007 at $10.55. Of course, one could argue that the company already took its hits in 2006 and 2007 when it lost 77% of its value, tumbling from its July 2005 high of $46.81 a share.
Despite the market crash, Pulte had amassed more than $1 billion in cash at the end of its second quarter and has projected that number will grow to between $1.7 billion and $1.9 billion by the end of 2008, even after paying off more than $313 million in debt. That leaves Pulte with the luxury other builders don't have of being able to hold on to the land it thinks will be valuable as the market climbs out of the abyss, rather than selling it at fire-sale prices to generate cash and tax refunds based on the losses.
Still, there are analysts who criticize Pulte for tightly holding on to its dirt, suggesting it would be better off to adopt "land light" strategies employed by other builders. Pulte CEO Richard Dugas has said that only should apply to cash-poorer builders with land that is easily replaceable.