Has PHM Quietly Become a Value Play?
Here is why we think PulteGroup (PHM) deserves consideration as a value stock. It is currently trading nearly 9.1% below its 1 year high, and also trading at a PS multiple which is below the average for the last 3 years. However, it has reasonable fundamentals for its level of valuation.
- Reasonable Revenue Growth: 5.0% LTM and 6.6% last 3 year average.
- Cash Generative: Nearly 7.4% free cash flow margin and 19.9% operating margin LTM.
- No Major Margin Shocks: PHM has avoided any large margin collapse in the last 12 months.
- Modest Valuation: Despite encouraging fundamentals, PHM trades at a PE multiple of 9.8
- Opportunity vs S&P: Compared to S&P, you get lower valuation, higher 3 year average revenue growth, and better operating margins
As a quick background, PulteGroup provides land acquisition, residential development, home construction, and mortgage loan origination primarily for homebuyers.
| PHM | S&P Median | |
|---|---|---|
| Sector | Consumer Discretionary | – |
| Industry | Homebuilding | – |
| PE Ratio | 9.8 | 23.9 |
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| LTM* Revenue Growth | 5.0% | 5.2% |
| 3Y Average Annual Revenue Growth | 6.6% | 5.3% |
| LTM Operating Margin Change | -1.5% | 0.3% |
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| LTM* Operating Margin | 19.9% | 18.6% |
| 3Y Average Operating Margin | 21.0% | 17.8% |
| LTM* Free Cash Flow Margin | 7.4% | 13.3% |
*LTM: Last Twelve Months
But do these numbers tell the full story? Read Buy or Sell PHM Stock to see if PulteGroup still has an edge that holds up under the hood.
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That is one way to look at stocks. Trefis High Quality Portfolio evaluates much more, and is designed to reduce stock-specific risk while giving upside exposure
Stocks Like These Can Outperform. Here Is Data
Below are statistics for stocks with same selection strategy applied between 12/31/2016 and 6/30/2025.
- Average 6-month and 12-month forward returns of 12.7% and 25.8% respectively
- Win rate (percentage of picks returning positive) of > 70% for both 6-month and 12-month periods
- Not over dependent on market crashes. During non-crash periods as well, this strategy has 12-month average return of nearly 20% with 67% win rate.
But Consider The Risk
That said, PHM isn’t immune to big drops. It fell nearly 50% in the Dot-Com Bubble and almost 80% during the Global Financial Crisis. The 2018 correction and recent inflation shock both knocked it down about 40%. Even the Covid sell-off pushed it over 60% lower. The stock can hold up well in normal times, but when markets turn volatile, PHM can take a serious hit.
But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read PHM Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.
The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.