PULTEGROUP INC (NYSE:PHM) – A Potentially Undervalued Stock with Strong Fundamentals

PULTEGROUP INC (NYSE:PHM) was identified by our Decent Value stock screener as a candidate with attractive valuation metrics while maintaining solid financial health, profitability, and reasonable growth. The homebuilder stands out for its strong balance sheet, high profitability, and relatively low valuation compared to peers.

Valuation

PHM appears undervalued based on several key metrics:

• P/E Ratio: At 7.99, it is significantly lower than the S&P 500 average (27.52) and cheaper than 74.6% of its industry peers.
• Forward P/E: 9.24, suggesting the stock remains reasonably priced even when accounting for future earnings.
• Enterprise Value/EBITDA: More favorable than 82.5% of competitors, reinforcing its value proposition.

Financial Health

The company demonstrates strong financial stability:

• Low Debt: A Debt/Equity ratio of 0.17 is better than 69.8% of industry peers.
• High Solvency: An Altman-Z score of 5.94 indicates minimal bankruptcy risk.
• Strong Cash Flow: A Debt/FCF ratio of 1.41 means PHM could repay all debt in just over a year.

Profitability

PHM excels in profitability metrics:

• Return on Assets (16.98%) and Return on Equity (23.92%) rank among the top in the industry.
• Operating Margin (21.12%) outperforms 95.2% of competitors.
• Consistent earnings and cash flow over the past five years.

Growth

While future growth expectations are modest, historical performance is strong:

• Revenue Growth: 8.86% YoY, with an 11.94% average over recent years.
• EPS Growth: 32.15% average annual growth in past years, though a slight decline is projected ahead.

Our Decent Value screener lists more stocks with similar characteristics and is updated daily.
For a deeper analysis, review the full fundamental report on PHM.

Disclaimer

This is not investment advice. The observations are based on data available at the time of writing, and investors should conduct their own research before making decisions.