PHM

We rate PULTEGROUP INC/MI/ (PHM) as a Hold with a composite score of 56.4/100 at a current price of $140.88. The stock presents a mixed quantitative picture — neither compelling enough to warrant new accumulation nor weak enough to justify selling for existing holders. Our factors are split, and the overall profile suggests patience is warranted.

The rating is primarily driven by strength in stability (82th percentile) and value (68th percentile), which together account for the majority of the composite score. Offsetting weakness in investment (36th percentile) and quality (53th percentile) tempers our overall conviction. We assign a Narrow Moat rating (53/100), Low uncertainty, and Standard capital allocation.

Key items to watch: quarterly earnings execution and sector-level competitive dynamics. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

PULTEGROUP INC/MI/ holds a mid-tier position (#35 of 50) within the Construction sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 56.4/100 places it at rank #1096 in our full 7,333-stock universe. With a $26.1B market capitalization, PULTEGROUP INC/MI/ operates at meaningful scale within the Construction sector, providing competitive advantages in distribution, procurement, and customer reach.

Revenue contraction of -4% combined with momentum at the 60th percentile paints a cautious picture of the near-term business outlook. The market appears to be pricing in continued challenges, and a catalyst for reversal is not clearly visible from current data.

The margin cascade tells an important story: gross margins of 29% (+5.2pp vs sector) narrow to operating margins of 17% (+9.7pp vs sector) and net margins of 14.0%, yielding a gross-to-net conversion rate of 49%. This efficient conversion suggests well-controlled operating costs and limited margin leakage between the gross and net levels.

At a current price of $140.88, PULTEGROUP INC/MI/ is trading near fair value based on current fundamentals. Our value factor score of 68/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. Valuation metrics are mixed, with no strong signal of mispricing in either direction.

The stock currently trades at a P/E of 11.1x (a 42% discount to the sector median of 19.1x), EV/EBITDA of 8.2x (discounted to peers), P/B of 2.1x, P/S of 1.6x. The below-sector P/E suggests possible undervaluation or the market pricing in near-term headwinds.

We assign a Low uncertainty rating to PULTEGROUP INC/MI/. The company exhibits strong financial stability with a beta of 0.69, conservative leverage (0% D/E), and a stability factor in the 82th percentile. The predictable nature of the business model and solid financial position reduce the range of potential outcomes, giving us confidence in our fair value estimate.

Specific risk factors that inform our assessment include: low beta of 0.69 — while defensive, this may indicate limited upside participation in bull markets. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 82th percentile and quality factor at the 53th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: conservative leverage (0% D/E) limits balance sheet risk; above-average stability (82th percentile) suggests predictable business dynamics. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate PULTEGROUP INC/MI/'s capital allocation as Standard. Management has shown adequate — though not exceptional — stewardship of shareholder capital. Returns on equity stand at 18.6%, and the balance sheet is managed within acceptable parameters (D/E: 0%). Exemplary allocators typically sustain ROE above 20% and D/E below 50%; PULTEGROUP INC/MI/ falls short on at least one dimension.

There is room for improvement in optimizing the capital structure or enhancing shareholder returns. The 0.67% dividend yield provides some income return, but the overall capital allocation framework would benefit from either higher reinvestment returns, improved balance sheet efficiency, or increased shareholder distributions. We will monitor for signs of strategic improvement that could warrant an upgrade.

In summary, PULTEGROUP INC/MI/ receives a Hold rating with a composite score of 56.4/100 (rank #1096 of 7,333). Our quantitative framework assigns a Narrow Moat (53/100, trend: stable), Low uncertainty, and Standard capital allocation. The average factor score across quality, value, momentum, stability, and investment is 60/100.

Our analysis supports a neutral stance on PULTEGROUP INC/MI/. While the quantitative profile is not weak enough to warrant selling, it lacks the multi-factor strength required for a buy recommendation. Existing holders should maintain positions and monitor for catalysts — either fundamental improvement or valuation compression — that would shift the risk-reward balance.