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Why You Should Add PulteGroup (PHM) to Your Portfolio Now


Among homebuilding companies making good strides in recent times, PulteGroup, Inc. PHM offers a good investment choice with solid prospects. Let us delve deeper into the other factors which make this stock a lucrative pick.

Earnings & Revenue Growth

PulteGroup makes a great pick in terms of growth investment. The company currently has a Growth Score of ‘B’ on our style score system that helps us identify potential outperformers.

The company’s 2017 earnings is expected to increase 32.1%, while the Zacks categorized Building Residential/Commercial industry’s average calls for EPS growth of 17.3%.

Meanwhile, the company’s sales are also expected to increase 14.6% in the current year compared with the industry average growth of 7.3%. Hence, PulteGroup makes for a great pick in terms of Growth investment.

Stock Price Movement and Other Return

Shares of PulteGroup have returned more than 34.2% year to date comparing favorably with the industry’s gain of 31.6%, giving the stock a Momentum Score of ‘B’. The stock has also performed well compared with the broader market (S&P 500) that climbed only 8.5% during the same time.

Furthermore, the Return on Equity delivered in the trailing 12 months is around 12.74%, while the industry returned 11.14%.

Industry Outlook Positive

The Zacks Building Residential/Commercial industry has outperformed the broader market so far this year. Currently, the industry ranks among the top 8% (20 out of 265 industries). Along with the strong past performance of the industry, a good industry rank signals at the stock likely to benefit from favorable broader factors in the immediate future.

The U.S. homebuilding industry is in good shape and is still one of the pillars on which the economy rests. The 2017 outlook for homebuilding is quite compelling given historically low mortgage rates and impressive home sales data. Consistent job growth, healthy demand-supply balance along with seemingly high homebuilders’ confidence are adding to the momentum.

Estimate Revisions

In the last 90 days, the Zacks Consensus Estimate for PulteGroup’s EPS moved north by 0.5% for 2017. The positive earnings estimate revisions suggest that analysts are getting a shade more bullish on the company’s prospects.

Notably, PulteGroup, a Zacks Rank #2 (Buy) stock, surpassed estimates in each of the trailing four quarters, with an average beat of 9.59%.

VGM Score

PulteGroup has a VGM Score of 'B'. Our VGM Score identifies stocks that have the most attractive value, growth, and momentum characteristics. In fact, our research shows that stocks with VGM Scores of 'A' or 'B' when combined with a Zacks Rank #1 (Strong Buy) or 2 make solid investment choices.

Other Stocks to Consider

You can consider other top-ranked stocks in the same space.

KB Home KBH sports a Zack Rank #1. Its earnings are expected to grow 51.7% in fiscal 2017. You can see the complete list of today’s Zacks #1 Rank stocks here.

William Lyon Homes WLH carries a Zacks Rank #1. Its earnings are expected to grow 38.4% this year.

NVR, Inc. NVR also carries a Zacks Rank #1. Its earnings are expected to increase 24.8% this year.

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