PulteGroup’s (PHM) preliminary signups for the first two months of 2011 has been announced this Monday, ahead of the investor meeting. The company’s net signups for the two months ended February 28, 2011 totaled 2,674 homes, up 10.7% year over year from the corresponding period of 2010. Specifically speaking, January recorded 1,206 signups followed by 1,468 signups in February.
Last year’s adjusted signups for the same period were 2,415 homes, down by almost 450 units from actually realized figures. The mismatch was driven by alterations in Pulte’s signup process. Thus, as compared with the actual figures, net signups for the first two months of 2011 is lower by 7% approximately accompanied by an 8% decrease in community count.
However, PulteGroup is very optimistic about the upcoming quarters as the overall demand condition is gradually improving and that too at a rate higher than the company’s internal business plan. According to the company, traffic and signup rates in its communities are also satisfactory, despite the absence of the Federal tax incentive. In fact, from January to February, PulteGroup realized a 13% month-over-month pickup in traffic.
PulteGroup’s latest attempt to disclose energy efficiency information about the homes for-sale has largely attracted potential buyers. The company has teamed up with the Residential Energy Services Network (RESNET), the leading national independent authority on home energy performance, to extensively use the home energy-efficiency labels in a number of PulteGroup communities, including Centex, Pulte Homes and Del Webb. Thereby, more of homebuyers will be going in for energy-efficient homes, pushing up the company’s sales and signups.
However, concerns regarding the U.S. economy as well as the housing industry remain, owing to a weak employment scenario and a bottomed consumer confidence. The housing industry is expected to experience a trough and will thus fail to contribute to the overall economic growth anytime soon.
Thus we maintain a Neutral recommendation on PulteGroup in the long term. We currently have a short-term Zacks #3 Rank (short-term Hold recommendation) on the stock.
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