Here's What Investors Must Know Ahead of PulteGroup's Q2 Earnings

PulteGroup Inc. PHM is scheduled to report its second-quarter 2025 results on July 22, before the opening bell.

In the last reported quarter, the company’s earnings per share (EPS) and revenues beat the Zacks Consensus Estimate by 4.1% and 0.7%, respectively. On the contrary, both metrics declined year over year by 10.5% and 1.4%, respectively.

PulteGroup’s earnings have topped the consensus mark in each of the trailing four quarters, with an average surprise of 7.9%.

Trend in PHM’s Estimate Revision

The Zacks Consensus Estimate for the to-be-reported quarter’s EPS has trended downward to $2.93 from $2.94 in the past seven days. The estimated figure indicates an 18.2% decrease from the year-ago EPS of $3.58.

PulteGroup, Inc. Price and EPS Surprise

PulteGroup, Inc. price-eps-surprise | PulteGroup, Inc. Quote

The consensus mark for revenues is pegged at $4.39 billion, implying a 4.5% year-over-year decline. (Find the latest earnings estimates and surprises on Zacks Earnings Calendar.)

Factors Likely to Shape PulteGroup’s Q2 Earnings

Revenues

PulteGroup's second-quarter top line is likely to have decreased year over year, primarily due to the ongoing affordability challenges in the housing market. The company is likely to have faced pressure from still-high mortgage rates, which continue to impact homebuyers. With the increasing housing inventory levels in the market and the lingering macro risks, the company’s revenue scale is likely to have been compromised, thereby reducing leverage.

PHM expects home closings to be approximately 7,400-7,800 units, down from 8,097 units a year ago. Our model predicts home closings to decline 6.6% year over year to 7,561 units.

Although its balanced operating model, mortgage rate buydown program and favorable home pricing are likely to have supported its underlying prospects, the current uncertainties surrounding the housing market are expected to have overshadowed the top-line performance.

Segment-wise, for the second quarter of 2025, our model predicts overall Homebuilding revenues (which contributed 97.4% to total revenues in the first quarter of 2025) to decrease 4.3% year over year to $4.3 billion, due to lower home closings. Our model expects financial services revenues (which contributed 2.6% to total revenues in the first quarter) to increase 1.4% year over year to $113.2 million.

Nonetheless, PulteGroup’s focus on entry-level homes, a prudent land investment strategy and affordable product offerings is likely to have somewhat aided the top line. PHM's pricing strategy focuses on balancing affordability challenges faced by homebuyers and shifting market dynamics. The company expects a higher average selling price (ASP) for the quarter between $560,000 and $570,000 compared with the year-ago level of $549,000. Our model predicts the ASP of homes closed to increase 2.4% year over year to $$562,200.

Margins

PulteGroup is likely to have faced significant margin pressure in the second quarter, due to the need for incentives to manage affordability concerns while maintaining profitability. The company's bottom line is expected to have decreased year over year in the quarter, due to higher incentive costs stemming from competitive market dynamics. That said, prudent cost-saving efforts are likely to have partly mitigated the risks.

The company expects home sales gross margin to be between 26.5% and 27% for the quarter, down from 29.9% reported in the year-ago period. Our model predicts homebuilding gross margin to be 26.7% for the quarter, down 320 basis points from the year-ago period.

Orders & Backlogs

Our model expects PHM’s net new orders to increase 2.1% year over year to 7,811 units in the quarter. We expect the total backlog to decline 10.8% to 11,585 units, with the total backlog value declining 7.3% year over year to $7.51 billion.

What the Zacks Model Unveils for PHM

Our proven model does not conclusively predict an earnings beat for PulteGroup this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here.

Earnings ESP: PHM has an Earnings ESP of -1.27%. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks With the Favorable Combination

Here are some stocks from the Zacks Construction sector, which, per our model, have the right combination of elements to deliver an earnings beat this time around.

Primoris Services Corporation PRIM has an Earnings ESP of +5.33% and a Zacks Rank of 1.

The company’s earnings beat estimates in each of the last four quarters, the average surprise being 44.8%. Primoris Services’ earnings for the second quarter of 2025 are expected to increase 1.9%.

United Rentals, Inc. URI currently has an Earnings ESP of +5.33% and a Zacks Rank of 2.

The company’s earnings beat estimates in two of the last four quarters and missed on the other two occasions, the negative average surprise being 1.2%. United Rentals’ earnings for the second quarter of 2025 are expected to tumble 1.5%.

Armstrong World Industries, Inc. AWI currently has an Earnings ESP of +1.71% and a Zacks Rank of 3.

The company’s earnings beat estimates in each of the trailing four quarters, the average surprise being 6.5%. Armstrong World’s earnings for the second quarter of 2025 are expected to increase 8%.

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This article originally published on Zacks Investment Research (zacks.com).

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