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Last update on 2024-06-07

PulteGroup (PHM) - Piotroski F-Score Analysis for Year 2023 (Final Score: 5/9)

Piotroski F-Score Analysis on PulteGroup (PHM) for 2023 reveals a score of 5/9, based on profitability, liquidity, and leverage criteria.

Knowledge hint:
The Piotroski F-Score is a number between 0 to 9 which reflects the strength of a company's financial position. It is based on 9 criteria involving profitability, liquidity, and leverage. This model helps investors identify stocks that are strong, undervalued investments.
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Short Analysis - Piotroski Score: 5

We're running PulteGroup (PHM) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Criteria
Company has a positive net income?
1
Company has a positive cash flow?
1
Return on Assets (ROA) are growing?
0
Operating Cashflow are higher than Netincome?
0
Leverage is declining?
1
Current Ratio is growing?
1
Number of shares not diluted?
1
Cross Margin is growing?
0
Asset Turnover Ratio is growing?
0

PulteGroup (PHM) has been evaluated using the Piotroski F-Score, which assesses a company's financial health on a scale from 0 to 9 based on different criteria such as profitability, liquidity, and operating efficiency. For 2023, PHM scored a 5 out of 9. Key highlights include: a positive net income of $2.6 billion and a positive operating cash flow of $2.2 billion, indicating strong profitability and financial health. Additionally, the leverage ratio has improved to 0.1587, and the current ratio has increased, showcasing enhanced liquidity. However, some areas like return on assets (ROA) and gross margin have shown declines, and operating cash flow was lower than net income.

Insights for Value Investors Seeking Stable Income

Based on the Piotroski F-Score of 5, PulteGroup (PHM) presents a mixed picture. The company shows strengths in profitability and liquidity but has areas that need improvement, such as asset efficiency and gross margin management. With moderate financial health, PHM may be worth considering for investment due to its strong cash flow and reduced leverage, but investors should keep an eye on its efficiency and profitability trends. Due diligence and further analysis are recommended to gain a fuller understanding of its long-term potential.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of PulteGroup (PHM)

Company has a positive net income?

One of the criteria in Piotroski Analysis is whether the company’s net income is positive. A positive net income indicates profitability during the period, thus contributing 1 point to the score.

Historical Net Income of PulteGroup (PHM)

'PulteGroup (PHM)' marks a net income of $2,602,372,000 for 2023. This indicates significant profitability. Over the past 20 years, PulteGroup has fluctuated in terms of profitability, especially through the financial crisis of 2008 and subsequent years. The impressive rebound in recent years shows a positive upward trend. Net income being positive in 2023 indeed adds 1 point in the Piotroski F-Score, portraying a favorable picture.

Company has a positive cash flow?

Cash Flow from Operations (CFO) indicates the cash generated by a company's regular business operations. Positive CFO signifies a firm is generating sufficient funds from its core activities, making it crucial for assessing business health.

Historical Operating Cash Flow of PulteGroup (PHM)

PulteGroup (PHM) reports a positive Cash Flow from Operations (CFO) of $2,196,762,000 in 2023, which adds 1 point based on the criterion. This trend shows that the company is generating enough cash from its regular business operations, marking it as financially healthy without relying on external financing. Reviewing the last 20 years of CFO, PulteGroup has seen significant fluctuations, with negative CFO values in years like 2003, 2004, 2006, 2011, and 2015. However, the remarkable surge in 2023 signifies substantial growth and operational efficiency.

Return on Assets (ROA) are growing?

Change in ROA refers to comparing current ROA with previous year's ROA to gauge profitability improvement. It's crucial for assessing financial health and operational efficiency.

Historical change in Return on Assets (ROA) of PulteGroup (PHM)

In 2023, PulteGroup's ROA was 0.1685 compared to 0.186 in 2022. This indicates a decrease in ROA, scoring 0 points for this criterion. Consistently performing below the industry median, PulteGroup's investment efficacy indicates room for improvement.

Operating Cashflow are higher than Netincome?

Evaluate if Operating Cash Flow is higher than Net Income for PulteGroup (PHM) in 2023.

Historical accruals of PulteGroup (PHM)

In 2023, PulteGroup's Operating Cash Flow stands at $2.197 billion, whereas its Net Income is $2.602 billion. Thus, the Operating Cash Flow is lower than the Net Income, earning a score of 0 in this criterion. Over the last 20 years, Operating Cash Flow has been highly volatile, reflecting various economic cycles and corporate strategies. Meanwhile, Net Income has also seen significant fluctuations but with a generally upward trajectory in recent years. Therefore, this singular point in 2023 underlines a specific, non-recurring situation rather than a persistent trend. Nevertheless, a positive Operating Cash Flow is a good indicator of strong financial health even if it is lower than Net Income; it shows the company's robust capability to generate cash from core operations.

Liquidity of PulteGroup (PHM)

Leverage is declining?

Change in Leverage assesses the company's risk by looking at the change in financial leverage ratios year-over-year.

Historical leverage of PulteGroup (PHM)

The Leverage of PulteGroup has decreased from 0.184 in 2022 to 0.1587 in 2023, indicating a reduction in financial risk. Historically, leverage has fluctuated significantly, reaching a peak of 0.4485 in 2011 and seeing consistent risk reduction over the recent decade. This drop in leverage is a positive sign, adding 1 point to the Piotroski score.

Current Ratio is growing?

The Piotroski F-Score tells us to evaluate whether the company's current ratio has increased.

Historical Current Ratio of PulteGroup (PHM)

In 2023, PulteGroup's (PHM) current ratio stands at 9.8691, which is an improvement from 8.8249 in 2022. This uptick represents an enhancing liquidity position for the company, resulting in a score of 1. The current ratio is above the industry median of 5.5847 for the same year, indicating PulteGroup's superior short-term financial stability compared to its peers. Historically, the firm has seen fluctuating current ratios, with significant improvements in recent years. This trend is positive as it points towards better liquidity management, making PulteGroup a better investment choice.

Number of shares not diluted?

The criterion compares the outstanding shares from one year to the next and adds one point if there's a decrease because it typically indicates share buybacks, reducing dilution.

Historical outstanding shares of PulteGroup (PHM)

In 2023, PulteGroup (PHM) had 219,958,000 outstanding shares compared to 235,010,000 in 2022. This represents a decrease in outstanding shares, signaling a successful share buyback program. Over the last 20 years, PHM's outstanding shares have generally trended downwards from a high of 386,866,000 in 2013 to the current levels.

Operating of PulteGroup (PHM)

Cross Margin is growing?

The criterion 'Change in Gross Margin' compares Gross Margin year-over-year.

Historical gross margin of PulteGroup (PHM)

Comparing PHM's Gross Margin of 0.2938 in 2023 with 0.3021 in 2022 shows a decline, and hence, it gets 0 points. A drop from 0.3021 to 0.2938 indicates management's challenge in maintaining product cost efficiency. It's a negative sign as it points towards potential profitability issues or rising costs. Historical data reflects fluctuating margins, but PHM generally performed better than the industry median. Recently, it matched or stayed slightly above the median level, suggesting some degree of competitive advantage, though recent declines are concerning.

Asset Turnover Ratio is growing?

The Asset Turnover criterion assesses a company's efficiency in using its assets to generate sales. It is calculated as the ratio of sales to average total assets.

Historical asset turnover ratio of PulteGroup (PHM)

For PulteGroup (PHM), the Asset Turnover ratio has decreased from 1.137 in 2022 to 1.0401 in 2023. This represents a decline in the company's efficiency in utilizing its assets to generate revenue over the past year. Historically, the Asset Turnover ratio peaked at 1.2681 in 2004 and hit a low of 0.46 in 2009. The recent downturn suggests that PHM may need to better optimize its assets to sustain or enhance production capacity. Consequently, this criterion does not add a point to PHM's Piotroski score.


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