When you look at NYSE:PHM, it's hard to ignore the strong fundamentals, especially considering its likely undervaluation.

Last update: Feb 5, 2024

Our stock screener has spotted PULTEGROUP INC (NYSE:PHM) as an undervalued stock with solid fundamentals. NYSE:PHM shows decent health and profitability. At the same time it remains remains attractively priced. We'll dive into each aspect below.

Unpacking NYSE:PHM's Valuation Rating

ChartMill assigns a Valuation Rating to every stock. This score ranges from 0 to 10 and evaluates the different valuation aspects and compares the price to earnings and cash flows, while taking into account profitability and growth. NYSE:PHM scores a 7 out of 10:

A Price/Earnings ratio of 8.91 indicates a reasonable valuation of PHM.
Compared to the rest of the industry, the Price/Earnings ratio of PHM indicates a somewhat cheap valuation: PHM is cheaper than 79.10% of the companies listed in the same industry.
PHM is valuated cheaply when we compare the Price/Earnings ratio to 26.19, which is the current average of the S&P500 Index.
The Price/Forward Earnings ratio is 9.09, which indicates a very decent valuation of PHM.
Compared to the rest of the industry, the Price/Forward Earnings ratio of PHM indicates a rather cheap valuation: PHM is cheaper than 82.09% of the companies listed in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 21.44. PHM is valued rather cheaply when compared to this.
PHM's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. PHM is cheaper than 85.07% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, PHM is valued a bit cheaper than 64.18% of the companies in the same industry.
PHM has an outstanding profitability rating, which may justify a higher PE ratio.

Profitability Assessment of NYSE:PHM

Discover ChartMill's exclusive Profitability Rating, a proprietary metric that assesses stocks on a scale of 0 to 10. It takes into consideration various profitability ratios and margins, both in absolute terms and relative to industry peers. Notably, NYSE:PHM has achieved a 9:

PHM has a Return On Assets of 17.57%. This is amongst the best in the industry. PHM outperforms 97.01% of its industry peers.
PHM has a better Return On Equity (27.58%) than 89.55% of its industry peers.
With an excellent Return On Invested Capital value of 21.76%, PHM belongs to the best of the industry, outperforming 98.51% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for PHM is significantly above the industry average of 10.21%.
The 3 year average ROIC (16.67%) for PHM is below the current ROIC(21.76%), indicating increased profibility in the last year.
PHM has a Profit Margin of 16.30%. This is amongst the best in the industry. PHM outperforms 92.54% of its industry peers.
PHM's Profit Margin has improved in the last couple of years.
PHM's Operating Margin of 21.32% is amongst the best of the industry. PHM outperforms 98.51% of its industry peers.
In the last couple of years the Operating Margin of PHM has grown nicely.
Looking at the Gross Margin, with a value of 29.33%, PHM is in the better half of the industry, outperforming 61.19% of the companies in the same industry.
PHM's Gross Margin has improved in the last couple of years.

ChartMill's Evaluation of Health

Every stock is evaluated by ChartMill, receiving a Health Rating on a scale of 0 to 10. This assessment considers different health aspects, including liquidity and solvency, both in absolute terms and relative to industry peers. NYSE:PHM has achieved a 7 out of 10:

An Altman-Z score of 5.60 indicates that PHM is not in any danger for bankruptcy at the moment.
With an excellent Altman-Z score value of 5.60, PHM belongs to the best of the industry, outperforming 89.55% of the companies in the same industry.
PHM has a debt to FCF ratio of 0.86. This is a very positive value and a sign of high solvency as it would only need 0.86 years to pay back of all of its debts.
Looking at the Debt to FCF ratio, with a value of 0.86, PHM is in the better half of the industry, outperforming 76.12% of the companies in the same industry.
A Debt/Equity ratio of 0.24 indicates that PHM is not too dependend on debt financing.
A Current Ratio of 3.96 indicates that PHM has no problem at all paying its short term obligations.
PHM's Current ratio of 3.96 is fine compared to the rest of the industry. PHM outperforms 70.15% of its industry peers.
PHM does not score too well on the current and quick ratio evaluation. However, as it has excellent solvency and profitability, these ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.

Growth Insights: NYSE:PHM

A key component of ChartMill's stock assessment is the Growth Rating, which spans from 0 to 10. This rating evaluates diverse growth factors, such as EPS and revenue growth, considering both past performance and future projections. NYSE:PHM has received a 5 out of 10:

PHM shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 21.82%, which is quite impressive.
The Earnings Per Share has been growing by 37.18% on average over the past years. This is a very strong growth
The Revenue has been growing by 13.61% on average over the past years. This is quite good.

More Decent Value stocks can be found in our Decent Value screener.

For an up to date full fundamental analysis you can check the fundamental report of PHM

Keep in mind

This is not investing advice! The article highlights some of the observations at the time of writing, but you should always make your own analysis and invest based on your own insights.