PulteGroup revenue beats but margins squeeze shares
Homebuilder reports $4.61B Q4 revenue, while gross margin compression drags reported EPS below estimates
PulteGroup shares slipped in pre-market trading Wednesday after the homebuilder delivered mixed fourth-quarter results, highlighted by a revenue beat that was tempered by margin compression and one-time charges that pushed reported earnings below analyst expectations.
The Atlanta-based company reported quarterly revenue of $4.61 billion, surpassing the $4.31 billion consensus estimate, while net new orders increased 4% to 6,428 homes. However, reported earnings per share of $2.56 fell short of the $2.90 projection, dragged down by an $81 million divestiture charge and $35 million land impairment. On an adjusted basis, EPS of $2.88 beat expectations of $2.78.
The company's gross margin declined to 24.7% from 27.5% year-over-year, reflecting broader pressures across the housing sector as builders navigate elevated construction costs and a challenging demand environment. The backlog contracted to 8,495 homes from 10,153 in the prior year, signaling potential headwinds for future revenue recognition.
Chief Executive Officer Ryan Marshall cited "lagging consumer confidence" as a factor affecting demand, according to the earnings announcement. The comments come as the housing market faces uncertainty around interest rates and affordability concerns that have cooled buyer enthusiasm following the pandemic-driven surge.
Despite the margin pressure, PulteGroup continued returning capital to shareholders, executing $300 million in share repurchases during the fourth quarter. The company completed $1.2 billion in buybacks throughout 2025, demonstrating management's commitment to shareholder returns even as it invests in growth.
The mixed performance reflects the broader homebuilding landscape, where companies have benefited from strong order books in recent quarters but are now seeing signs of moderating demand. PulteGroup's results follow a pattern set by other major builders that have reported revenue beats but profitability challenges as they absorb higher material and labor costs.
Analysts maintain a cautiously optimistic outlook on the sector, with PulteGroup currently trading at a price-to-earnings ratio of 9.56 against a consensus target price of $139.69. The stock's 96% institutional ownership suggests sophisticated investors continue to find value in the homebuilder's long-term prospects despite near-term volatility.
The company's ability to grow new orders while maintaining disciplined capital allocation could position it to benefit from any recovery in consumer confidence or stabilization in interest rates. However, the shrinking backlog and margin deterioration will likely remain focal points for investors assessing the trajectory of the housing market recovery.