Pulte Homes, Inc. (PHM)

The housing sector should be much weaker due to the housing bubble bust.

great company

Home builders will recover in my lifetime if I live another 40+ years.

The Feds can't solve all problems, nor should they. This stock is being manipulated, in my estimation. They're sitting on a bunch of inventory that isn't going to be purchased anytime soon.

With high interest rates, a cooling housing market, home values declining, and a subprime/mortgage bubble, I don't see high priced homebuilders going anywhere but down for the near future.

Since PHM’s merger with CTX will result in the creation of the largest home builder in the US - and insofar as we expect to see
increased M&A activity across many industries as credit conditions improve while valuations remain low - we took a closer look at
the PHM/CTX transaction. Conditions in the homebuilding market are as bad as they've ever been, obviously; and 2009 industry
revenues could easily fall to levels representing half of 2007 sales. Therefore, attempting to model sales growth, margins or asset
turns for the combined PHM entity would be useless. However, the new PHM will own a geographically and end-product
diversified portfolio of properties against a moderately-leveraged capital structure. Both companies have taken impairment charges
totaling something north of 40% of original book - and it seems reasonable to assume future impairments would be modest by this
scale barring an additional cataclysmic decline in property and home prices. Over the last several horrific years for the home
builders, both companies have generated a significant 'deferred tax asset' on their balance sheets. PHM cannot avail itself of CTX’s
DTAs for five years after the transaction closes.
Using PHM management guidance that the company should generate positive operating cash flow next year, and taking into account
the ample pro-forma cash available to meet near-term debt maturities, we value the combined entities at 1.0x adjusted tangible
book value (tangible book - net cash use in 2009 (essentially debt service) + the combined DTAs – a PV adjustment to CTX’s TBV
(5 years at 10%)) which equals ~$14.50 / share. We further discount this result by 20% as a margin of safety to arrive at our FV of
$11.50/share.
We have no rating on the stock currently; however, should the stock decline below $9.50 or so, we would consider circling back to
this analysis for further action.

Good Luck!
AlphaPuppy

Everything I've seen & read (including the latest Earnings Report) indicates extreme and justifiable negativity....no surprise. More importantly, there's no end in sight with things likely to get worst before there is any hope for a turnaround. At least a year or more...also no surprise.

So why does this stock rise? Just don't get it, as the long-term play seems too risky. "Shorts" the driving force? Again, don't get it and wouldn't buy (into) it....Worst now then @ its $8.20 52-week low. The only difference is now we know more how much worst off...with yet more to come.

As continued mortgage defaults flood the market with bargain pre-existing units, new home produces will continue to suffer losses. I expect a number of them will declare bankruptcy over the next year or so as they are stuck with inventory and unable to fund new building.

Homes down

You can all speculate as much as you want, the fact is builders are not selling homes, and when they do, there is no margin. The large builders will survive this cyclical trough because they are very solvent companies. The rest will get taken over or go under. This is still another year or so before the correction takes place. Expect earnings around the end of 08 to finally start to turn around. You want more of explanation, go ahead and ask for one. The time is not to buy.... yet..

Housing market is way down, and wont make a come back for a year or so.

it'll be months to years before homebuilders recover. not sure if this company will survive that long.

the first to go bankrupt?

rally picks

sad story... company builds crappy homes... housing market gets crappy.... interest rates get crappy... consumers get crappy about paying more... banks get crappy b/c of numerous repos... consumers get crappy b/c they live in crappy homes... company keeps building crappy homes.... consumers keep getting the crappy stick... Fed steps in and says "boo" to crappy interest rates... people clean the crap out of their eyes and quit buying crappy homes... crappy customers can't afford to finance another crappy home... crappy home company gets flushed down the toilet... sad, sad story...

S2007 . . .

To many houses on the market already why are you still building homes, specially if people can't even afford the ones they got or are about to loose it thanks to the wonderful lending establishments for allowing every Joe blow who can tie thier shoes to get a home loan.

Population growth

I think the housing downturn will last longer than expected and homebuilders will continue to suffer. These levels might be the time for a bargain hunter to buy for the long term, but for now, I'm a bear on all homebuilders.