Is It Too Late To Consider Buying PulteGroup, Inc. (NYSE:PHM)?

PulteGroup, Inc. (NYSE:PHM) received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$49.48 at one point, and dropping to the lows of US$40.64. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether PulteGroup's current trading price of US$44.09 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at PulteGroup’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for PulteGroup

What's the opportunity in PulteGroup?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 9.12% above my intrinsic value, which means if you buy PulteGroup today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth $40.40, there’s only an insignificant downside when the price falls to its real value. So, is there another chance to buy low in the future? Given that PulteGroup’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

What does the future of PulteGroup look like?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. PulteGroup's earnings over the next few years are expected to increase by 35%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? It seems like the market has already priced in PHM’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping an eye on PHM, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

If you'd like to know more about PulteGroup as a business, it's important to be aware of any risks it's facing. Every company has risks, and we've spotted 1 warning sign for PulteGroup you should know about.

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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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