Housing Recovery: One Beat, One Miss...Both Stocks Hammered
Homebuilder PulteGroup's second-quarter profit missed analysts' expectation on increased expenses, and the company said the number of homes booked fell 12 percent. Meanwhile, rival D.R. Horton reported a better-than-expected profit.
PulteGroup's shares, which have lost more than 20 percent value in the last two months, fell sharply following the earnings release.(Click here for the latest PHM quote.) D.R. Horton shares, which have gained about 7 percent value this year, also declined. (Click here to track DHI stock.)
PulteGroup recorded double-digit order growth throughout last year. But order growth fell to 4 percent in the first quarter as a shortage of new property ready for home development forced PulteGroup to slow down sales.
Orders — a key indicator for builders, who do not book revenue until they finish a house — fell to 4,885 homes in the quarter ended June. Order signup value fell 5 percent to $1.5 billion, compared with a year earlier.
Net income fell to $36.4 million, or 9 cents per share, from $42.4 million, or 11 cents per share, a year earlier.
Excluding a 17 cents per share charge related to a contractual dispute, debt repurchase and corporate relocation, Pulte earned 26 cents per share - 4 cents below the average analyst estimate, according to Thomson Reuters.
Home sale revenue increased 19 percent to $1.22 billion.
Selling, general and administrative and other expenses rose to $207.9 million in the quarter from $134.7 million.
DR Horton profit beats
Homebuilder D.R. Horton reported a better-than-expected profit as it sold more homes at higher prices in quarter ended June.
Demand for homes has remained strong despite a recent rise in mortgage rates as a shortage of homes available for sale has enabled builders to raise prices.
D.R. Horton, which sells homes priced between $100,000 and $600,000, said average selling price rose 15 percent in the third quarter.
Orders a key indicator for builders, who do not book revenue until they finish a house rose 12 percent to 6,822 homes.
Net income fell to $146 million, or 42 cents per share, from $787.8 million, or $2.22 per share, a year earlier.
Analysts on average had expected earnings of 34 cents per share, according to Thomson Reuters.
The year-ago quarter included a $716.7 million tax benefit.
Third-quarter homebuilding revenue rose 47 percent to $1.64 billion.