The home building earning parade continued this morning with news that PulteGroup, the nation's third largest builder, posted strong fourth-quarter 2015 results.
The highlights included:
• Net new orders increased 13% to 3,659 homes driven by 9% gain in absorption pace
• Value of net new orders increased 24% to $1.4 billion
• Home sale gross margin of 23.5%, up 40 basis points over prior year
• Home sale revenues increased 12% to $2 billion
• Closings increased 7% to 5,662 homes; average sales price up 6% to $353,000
• Q4 backlog value up 26% over prior year to $2.5 billion; unit backlog increased 15% to 6,731 homes
• PulteGroup ended the quarter with $775 million of cash and a debt-to-capital ratio of 30%
UBS' Susan Maklari called the results impressive:
Pulte remains one of our top picks driven by our belief that the company will generate accelerated EPS growth relative to peers. Our view considers: 1) diverse product offerings, including its exposure to active adult where upside remains to its sales pace as well as the slowly re-emerging entry level and first time buyer. As demand improves in these segments we look for operating margins to expand and cash flows to strengthen; 2) dedication to driving building efficiencies and controlling costs, even as sales strengthen, will contribute to margin improvement through the cycle; and 3) taking a more balanced approach to capital allocation and maximizing risk adjusted returns including returning cash to shareholders via repurchases and dividends.