Pulte has been steadily increasing its earnings per share
Pulte reported net income of $220 million, or $0.57 a share, which handily beat the Street estimate of $0.45 a share. The company earned $0.15 in the fourth quarter of 2012 and $0.45 in the third quarter. Given that builders generally have a letdown in the fourth quarter, these are good numbers indeed.
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Earnings per share were driven by the big increase in average selling prices as well as control of selling, general, and administrative expenses (SG&A). SG&A increased about $54 million, but as a percentage of revenues, it fell 30 basis points.
Also influencing earnings per share was the company’s buyback program, through which it repurchased a total of $35 million worth of stock. Leverage was reduced.
Chairman and chief executive officer Richard Dugas Jr. had this to say regarding the quarter:
Geographical shift seems to be occurring
The company noted that activity seemed to be shifting geographically, in that the previously red-hot West Coast markets were beginning to cool, while the lagging markets—particularly the East Coast and the Midwest—were beginning to pick up. Pulte believes the government shutdown in DC hurt fourth quarter sales on the East Coast, and that we won’t see a repeat of the shutdown. Texas is weaker, and New Mexico and Arizona are cooling as well. Florida and the Southeast are doing well. Overall, this could mean investors will want to shift out of West Coast–centric builders like Standard Pacific (SPF) and KB Home (KBH) into more diversified builders like Pulte (PHM) and D.R. Horton (DHI).