For investors with a long-term horizon, assessing earnings trend over time and against industry benchmarks is more valuable than looking at a single earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on PulteGroup Inc (NYSE:PHM) useful as an attempt to give more color around how PulteGroup is currently performing. Check out our latest analysis for PulteGroup

How PHM fared against its long-term earnings performance and its industry

I look at the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This technique enables me to assess different companies on a more comparable basis, using the most relevant data points. For PulteGroup, the most recent twelve-month earnings is $637M, which compared to last year’s figure, has risen by 15.11%. Given that these figures are fairly myopic, I’ve determined an annualized five-year value for PulteGroup’s net income, which stands at $492M. This shows that, on average, PulteGroup has been able to gradually improve its earnings over the past few years as well.

How has it been able to do this? Well, let’s take a look at if it is solely because of industry tailwinds, or if PulteGroup has seen some company-specific growth. Over the last few years, PulteGroup increased its bottom line faster than revenue by effectively controlling its costs. This has led to a margin expansion and profitability over time. Viewing growth from a sector-level, the US household durables industry has been growing, albeit, at a muted single-digit rate of 9.92% over the past twelve months, and a substantial 17.23% over the past five years. This shows that any tailwind the industry is profiting from, PulteGroup is capable of amplifying this to its advantage.

What does this mean?

PulteGroup’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I recommend you continue to research PulteGroup to get a more holistic view of the stock by looking at:

1. Future Outlook: What are well-informed industry analysts predicting for PHM’s future growth? Take a look at our free research report of analyst consensus for PHM’s outlook.

2. Financial Health: Is PHM’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.

3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.