PulteGroup Inc. (PHM) is the third largest homebuilder in the United States with brands like Centex, Pulte Homes, Del Webb, DiVosta Homes, American West, and John Wieland Homes and Neighborhoods. It has operations in 40 markets across the country.
The company’s diverse operating platform consists of 29% first-time buyers, 45% move-up buyers, and 26% active-adult buyers. In particular, its Del Webb and DiVosta brands are recognized leaders in serving baby boomers as they move toward retirement.
On a financial level, the company’s focus is on delivering maximum returns on invested capital and equity to grow long-term shareholder value. The company invests in geologically diverse high-returning projects, funds its dividend, and uses excess cash to repurchase shares.
A COVID-19 Safe Haven
Home sales have been a bright spot in an otherwise COVID-19 ravaged economy. During the four-week period ended November 29, pending home sales rose 28% and median home sale prices increased 16% to their highest levels on record, according to Redfin. The combination of low mortgage rates and an all-time low number of listings has led to higher prices.
During the third quarter, PulteGroup reported revenue that rose nearly 9% to $2.95 billion, beating consensus estimates by $170 million, and non-GAAP earnings of $1.34 per share, beating consensus estimates by 19 cents per share. Net new orders rose 36% to 8,202 homes and net new order value that rose 43% to $3.6 billion.
PulteGroup has been a beneficiary of these macroeconomic trends, leading it to increase its quarterly dividend by 16.7% to 14 cents per share—a 1.31% forward yield. The new dividend is payable on January 5, 2021 to shareholders on record on December 16, 2020.
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