Intrinsic value of PulteGroup - PHM

Previous Close

$31.11

  Intrinsic Value

$63.21

stock screener

  Rating & Target

str. buy

+103%

Previous close

$31.11

 
Intrinsic value

$63.21

 
Up/down potential

+103%

 
Rating

str. buy

We calculate the intrinsic value of PHM stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  28.18
  11.80
  11.12
  10.51
  9.96
  9.46
  9.02
  8.61
  8.25
  7.93
  7.63
  7.37
  7.13
  6.92
  6.73
  6.56
  6.40
  6.26
  6.13
  6.02
  5.92
  5.83
  5.74
  5.67
  5.60
  5.54
  5.49
  5.44
  5.40
  5.36
  5.32
Revenue, $m
  7,668
  9,585
  10,650
  11,770
  12,941
  14,166
  15,443
  16,773
  18,157
  19,597
  21,093
  22,648
  24,263
  25,943
  27,688
  29,503
  31,391
  33,357
  35,403
  37,534
  39,756
  42,072
  44,489
  47,011
  49,645
  52,397
  55,272
  58,279
  61,423
  64,713
  68,156
Variable operating expenses, $m
 
  8,411
  9,342
  10,319
  11,343
  12,412
  13,527
  14,689
  15,898
  17,155
  18,462
  19,781
  21,192
  22,658
  24,183
  25,768
  27,417
  29,134
  30,921
  32,782
  34,723
  36,746
  38,857
  41,060
  43,360
  45,763
  48,275
  50,901
  53,647
  56,520
  59,527
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  6,735
  8,411
  9,342
  10,319
  11,343
  12,412
  13,527
  14,689
  15,898
  17,155
  18,462
  19,781
  21,192
  22,658
  24,183
  25,768
  27,417
  29,134
  30,921
  32,782
  34,723
  36,746
  38,857
  41,060
  43,360
  45,763
  48,275
  50,901
  53,647
  56,520
  59,527
Operating income, $m
  934
  1,174
  1,309
  1,451
  1,599
  1,754
  1,916
  2,084
  2,259
  2,441
  2,631
  2,867
  3,072
  3,284
  3,505
  3,735
  3,974
  4,223
  4,482
  4,752
  5,033
  5,326
  5,632
  5,951
  6,285
  6,633
  6,997
  7,378
  7,776
  8,192
  8,628
EBITDA, $m
  988
  2,368
  2,632
  2,908
  3,198
  3,500
  3,816
  4,145
  4,487
  4,842
  5,212
  5,596
  5,995
  6,410
  6,842
  7,290
  7,757
  8,242
  8,748
  9,275
  9,823
  10,396
  10,993
  11,616
  12,267
  12,947
  13,658
  14,400
  15,177
  15,990
  16,841
Interest expense (income), $m
  27
  34
  36
  38
  39
  41
  43
  45
  47
  49
  52
  54
  57
  59
  62
  64
  67
  70
  73
  77
  80
  84
  87
  91
  95
  99
  104
  108
  113
  118
  123
Earnings before tax, $m
  934
  1,140
  1,273
  1,413
  1,560
  1,713
  1,873
  2,039
  2,212
  2,392
  2,579
  2,813
  3,015
  3,225
  3,443
  3,670
  3,907
  4,152
  4,408
  4,675
  4,953
  5,243
  5,545
  5,860
  6,190
  6,534
  6,894
  7,270
  7,663
  8,074
  8,505
Tax expense, $m
  331
  308
  344
  382
  421
  462
  506
  551
  597
  646
  696
  760
  814
  871
  930
  991
  1,055
  1,121
  1,190
  1,262
  1,337
  1,415
  1,497
  1,582
  1,671
  1,764
  1,861
  1,963
  2,069
  2,180
  2,296
Net income, $m
  603
  832
  929
  1,032
  1,139
  1,250
  1,367
  1,488
  1,615
  1,746
  1,883
  2,054
  2,201
  2,354
  2,514
  2,679
  2,852
  3,031
  3,218
  3,413
  3,616
  3,827
  4,048
  4,278
  4,519
  4,770
  5,032
  5,307
  5,594
  5,894
  6,209

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  699
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  10,178
  -6,688
  -7,432
  -8,213
  -9,031
  -9,886
  -10,777
  -11,705
  -12,671
  -13,675
  -14,719
  -15,804
  -16,932
  -18,104
  -19,322
  -20,588
  -21,906
  -23,277
  -24,705
  -26,193
  -27,743
  -29,359
  -31,046
  -32,806
  -34,644
  -36,564
  -38,571
  -40,669
  -42,863
  -45,159
  -47,561
Adjusted assets (=assets-cash), $m
  9,479
  -6,688
  -7,432
  -8,213
  -9,031
  -9,886
  -10,777
  -11,705
  -12,671
  -13,675
  -14,719
  -15,804
  -16,932
  -18,104
  -19,322
  -20,588
  -21,906
  -23,277
  -24,705
  -26,193
  -27,743
  -29,359
  -31,046
  -32,806
  -34,644
  -36,564
  -38,571
  -40,669
  -42,863
  -45,159
  -47,561
Revenue / Adjusted assets
  0.809
  -1.433
  -1.433
  -1.433
  -1.433
  -1.433
  -1.433
  -1.433
  -1.433
  -1.433
  -1.433
  -1.433
  -1.433
  -1.433
  -1.433
  -1.433
  -1.433
  -1.433
  -1.433
  -1.433
  -1.433
  -1.433
  -1.433
  -1.433
  -1.433
  -1.433
  -1.433
  -1.433
  -1.433
  -1.433
  -1.433
Average production assets, $m
  214
  11,549
  12,834
  14,182
  15,594
  17,070
  18,609
  20,212
  21,880
  23,614
  25,417
  27,291
  29,237
  31,261
  33,364
  35,551
  37,827
  40,195
  42,660
  45,229
  47,906
  50,697
  53,609
  56,648
  59,822
  63,138
  66,603
  70,226
  74,015
  77,979
  82,127
Working capital, $m
  0
  -6,029
  -6,699
  -7,403
  -8,140
  -8,910
  -9,714
  -10,550
  -11,421
  -12,326
  -13,267
  -14,245
  -15,262
  -16,318
  -17,416
  -18,558
  -19,745
  -20,981
  -22,268
  -23,609
  -25,006
  -26,463
  -27,983
  -29,570
  -31,227
  -32,957
  -34,766
  -36,657
  -38,635
  -40,704
  -42,870
Total debt, $m
  3,471
  664
  695
  728
  762
  798
  835
  874
  915
  957
  1,001
  1,047
  1,094
  1,143
  1,194
  1,247
  1,303
  1,360
  1,420
  1,483
  1,548
  1,616
  1,687
  1,761
  1,838
  1,918
  2,003
  2,091
  2,183
  2,279
  2,380
Total liabilities, $m
  5,519
  281
  312
  345
  379
  415
  453
  492
  532
  574
  618
  664
  711
  760
  812
  865
  920
  978
  1,038
  1,100
  1,165
  1,233
  1,304
  1,378
  1,455
  1,536
  1,620
  1,708
  1,800
  1,897
  1,998
Total equity, $m
  4,659
  -6,969
  -7,744
  -8,558
  -9,410
  -10,301
  -11,229
  -12,197
  -13,203
  -14,250
  -15,338
  -16,468
  -17,643
  -18,864
  -20,133
  -21,453
  -22,826
  -24,255
  -25,743
  -27,293
  -28,908
  -30,593
  -32,350
  -34,184
  -36,099
  -38,100
  -40,191
  -42,377
  -44,663
  -47,056
  -49,559
Total liabilities and equity, $m
  10,178
  -6,688
  -7,432
  -8,213
  -9,031
  -9,886
  -10,776
  -11,705
  -12,671
  -13,676
  -14,720
  -15,804
  -16,932
  -18,104
  -19,321
  -20,588
  -21,906
  -23,277
  -24,705
  -26,193
  -27,743
  -29,360
  -31,046
  -32,806
  -34,644
  -36,564
  -38,571
  -40,669
  -42,863
  -45,159
  -47,561
Debt-to-equity ratio
  0.745
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
Adjusted equity ratio
  0.453
  1.042
  1.042
  1.042
  1.042
  1.042
  1.042
  1.042
  1.042
  1.042
  1.042
  1.042
  1.042
  1.042
  1.042
  1.042
  1.042
  1.042
  1.042
  1.042
  1.042
  1.042
  1.042
  1.042
  1.042
  1.042
  1.042
  1.042
  1.042
  1.042
  1.042

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  603
  832
  929
  1,032
  1,139
  1,250
  1,367
  1,488
  1,615
  1,746
  1,883
  2,054
  2,201
  2,354
  2,514
  2,679
  2,852
  3,031
  3,218
  3,413
  3,616
  3,827
  4,048
  4,278
  4,519
  4,770
  5,032
  5,307
  5,594
  5,894
  6,209
Depreciation, amort., depletion, $m
  54
  1,194
  1,323
  1,458
  1,599
  1,746
  1,900
  2,061
  2,227
  2,401
  2,581
  2,729
  2,924
  3,126
  3,336
  3,555
  3,783
  4,019
  4,266
  4,523
  4,791
  5,070
  5,361
  5,665
  5,982
  6,314
  6,660
  7,023
  7,401
  7,798
  8,213
Funds from operations, $m
  -899
  2,026
  2,252
  2,489
  2,737
  2,997
  3,267
  3,549
  3,842
  4,147
  4,464
  4,783
  5,125
  5,480
  5,850
  6,235
  6,635
  7,051
  7,484
  7,936
  8,406
  8,897
  9,409
  9,943
  10,501
  11,084
  11,693
  12,329
  12,995
  13,692
  14,421
Change in working capital, $m
  -967
  -636
  -670
  -704
  -737
  -770
  -803
  -837
  -871
  -905
  -941
  -978
  -1,016
  -1,056
  -1,098
  -1,142
  -1,188
  -1,236
  -1,287
  -1,341
  -1,397
  -1,457
  -1,520
  -1,587
  -1,657
  -1,731
  -1,809
  -1,891
  -1,978
  -2,069
  -2,166
Cash from operations, $m
  68
  2,663
  2,923
  3,193
  3,475
  3,767
  4,071
  4,386
  4,713
  5,052
  5,405
  5,761
  6,141
  6,537
  6,948
  7,376
  7,822
  8,287
  8,771
  9,276
  9,803
  10,354
  10,929
  11,529
  12,157
  12,814
  13,501
  14,220
  14,973
  15,761
  16,587
Maintenance CAPEX, $m
  0
  -1,033
  -1,155
  -1,283
  -1,418
  -1,559
  -1,707
  -1,861
  -2,021
  -2,188
  -2,361
  -2,542
  -2,729
  -2,924
  -3,126
  -3,336
  -3,555
  -3,783
  -4,019
  -4,266
  -4,523
  -4,791
  -5,070
  -5,361
  -5,665
  -5,982
  -6,314
  -6,660
  -7,023
  -7,401
  -7,798
New CAPEX, $m
  -39
  -1,217
  -1,284
  -1,349
  -1,412
  -1,475
  -1,539
  -1,603
  -1,668
  -1,734
  -1,803
  -1,873
  -1,947
  -2,023
  -2,103
  -2,187
  -2,275
  -2,368
  -2,466
  -2,568
  -2,677
  -2,791
  -2,912
  -3,039
  -3,174
  -3,316
  -3,465
  -3,623
  -3,789
  -3,964
  -4,149
Cash from investing activities, $m
  -471
  -2,250
  -2,439
  -2,632
  -2,830
  -3,034
  -3,246
  -3,464
  -3,689
  -3,922
  -4,164
  -4,415
  -4,676
  -4,947
  -5,229
  -5,523
  -5,830
  -6,151
  -6,485
  -6,834
  -7,200
  -7,582
  -7,982
  -8,400
  -8,839
  -9,298
  -9,779
  -10,283
  -10,812
  -11,365
  -11,947
Free cash flow, $m
  -403
  412
  483
  561
  644
  732
  825
  922
  1,024
  1,130
  1,241
  1,345
  1,465
  1,590
  1,719
  1,853
  1,992
  2,136
  2,286
  2,442
  2,604
  2,772
  2,947
  3,129
  3,319
  3,516
  3,723
  3,937
  4,162
  4,396
  4,640
Issuance/(repayment) of debt, $m
  1,073
  30
  31
  33
  34
  36
  37
  39
  41
  42
  44
  46
  47
  49
  51
  53
  55
  58
  60
  62
  65
  68
  71
  74
  77
  81
  84
  88
  92
  96
  101
Issuance/(repurchase) of shares, $m
  -597
  -734
  -775
  -814
  -852
  -890
  -929
  -967
  -1,007
  -1,047
  -1,088
  -1,131
  -1,175
  -1,221
  -1,269
  -1,320
  -1,373
  -1,429
  -1,488
  -1,550
  -1,615
  -1,684
  -1,757
  -1,834
  -1,915
  -2,001
  -2,091
  -2,186
  -2,286
  -2,392
  -2,503
Cash from financing (excl. dividends), $m  
  476
  -704
  -744
  -781
  -818
  -854
  -892
  -928
  -966
  -1,005
  -1,044
  -1,085
  -1,128
  -1,172
  -1,218
  -1,267
  -1,318
  -1,371
  -1,428
  -1,488
  -1,550
  -1,616
  -1,686
  -1,760
  -1,838
  -1,920
  -2,007
  -2,098
  -2,194
  -2,296
  -2,402
Total cash flow (excl. dividends), $m
  73
  -292
  -261
  -220
  -174
  -122
  -67
  -6
  58
  126
  197
  260
  338
  418
  501
  586
  674
  765
  858
  954
  1,053
  1,155
  1,261
  1,369
  1,481
  1,596
  1,716
  1,839
  1,967
  2,100
  2,238
Retained Cash Flow (-), $m
  100
  734
  775
  814
  852
  890
  929
  967
  1,007
  1,047
  1,088
  1,131
  1,175
  1,221
  1,269
  1,320
  1,373
  1,429
  1,488
  1,550
  1,615
  1,684
  1,757
  1,834
  1,915
  2,001
  2,091
  2,186
  2,286
  2,392
  2,503
Prev. year cash balance distribution, $m
 
  6,236
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  34
  0
  0
  0
  0
  0
  0
  67
  73
  78
  84
  91
  97
  104
  111
  118
  126
  133
  142
  150
  159
  168
  178
  188
  199
  210
  221
  233
  246
  259
Cash available for distribution, $m
 
  6,678
  775
  814
  852
  890
  929
  967
  1,064
  1,172
  1,285
  1,391
  1,512
  1,639
  1,770
  1,906
  2,047
  2,194
  2,346
  2,504
  2,669
  2,840
  3,018
  3,203
  3,396
  3,597
  3,807
  4,026
  4,254
  4,492
  4,741
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  6,402
  709
  708
  702
  690
  674
  653
  665
  673
  673
  661
  645
  623
  594
  560
  520
  477
  432
  386
  339
  294
  250
  210
  173
  140
  111
  86
  66
  49
  36
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

PulteGroup, Inc. is a homebuilder in the United States. The Company's segments include Homebuilding and Financial Services. Its Homebuilding operations are engaged in the acquisition and development of land primarily for residential purposes within the United States and the construction of housing on such land. Its Financial Services operations consist principally of mortgage banking and title operations. The Company conducts its financial services business, through Pulte Mortgage LLC (Pulte Mortgage) and other subsidiaries. Pulte Mortgage arranges financing through the origination of mortgage loans. The Company's subsidiaries are engaged in the homebuilding business. It offers a product line to meet the needs of homebuyers in its focused markets. Through its brands, which include Centex, Pulte Homes, Del Webb, DiVosta Homes, and John Wieland Homes and Neighborhoods, the Company offers a range of home designs, including single-family detached, townhouses, condominiums and duplexes.

FINANCIAL RATIOS  of  PulteGroup (PHM)

Valuation Ratios
P/E Ratio 16.5
Price to Sales 1.3
Price to Book 2.1
Price to Tangible Book
Price to Cash Flow 146
Price to Free Cash Flow 342.3
Growth Rates
Sales Growth Rate 28.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -13.3%
Cap. Spend. - 3 Yr. Gr. Rate 6.1%
Financial Strength
Quick Ratio 2
Current Ratio NaN
LT Debt to Equity 67.4%
Total Debt to Equity 74.5%
Interest Coverage 36
Management Effectiveness
Return On Assets 6.4%
Ret/ On Assets - 3 Yr. Avg. 5.8%
Return On Total Capital 7.9%
Ret/ On T. Cap. - 3 Yr. Avg. 7.3%
Return On Equity 12.8%
Return On Equity - 3 Yr. Avg. 11.1%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 25.3%
Gross Margin - 3 Yr. Avg. 24.3%
EBITDA Margin 13.2%
EBITDA Margin - 3 Yr. Avg. 13.4%
Operating Margin 12.2%
Oper. Margin - 3 Yr. Avg. 12.5%
Pre-Tax Margin 12.2%
Pre-Tax Margin - 3 Yr. Avg. 12.6%
Net Profit Margin 7.9%
Net Profit Margin - 3 Yr. Avg. 8.1%
Effective Tax Rate 35.4%
Eff/ Tax Rate - 3 Yr. Avg. 35.4%
Payout Ratio 20.7%

PHM stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PHM stock intrinsic value calculation we used $8573 million for the last fiscal year's total revenue generated by PulteGroup. The default revenue input number comes from 2016 income statement of PulteGroup. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our PHM stock valuation model: a) initial revenue growth rate of 11.8% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for PHM is calculated based on our internal credit rating of PulteGroup, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of PulteGroup.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of PHM stock the variable cost ratio is equal to 87.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for PHM stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for PulteGroup.

Corporate tax rate of 27% is the nominal tax rate for PulteGroup. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the PHM stock is equal to 0.4%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for PHM are equal to 120.5%.

Life of production assets of 10 years is the average useful life of capital assets used in PulteGroup operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for PHM is equal to -62.9%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $0 million for PulteGroup - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 305 million for PulteGroup is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of PulteGroup at the current share price and the inputted number of shares is $9.5 billion.

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COMPANY NEWS

▶ Elizabeth townhouse project runs into snag over deed restrictions   [Jul-19-18 02:48PM  American City Business Journals]
▶ These are the best (and worst) places to retire   [Jul-12-18 01:23PM  Yahoo Finance Video]
▶ Opendoor forges partnership with Phoenix home builders   [Jul-09-18 09:00PM  American City Business Journals]
▶ More Gains in Store for Homebuilders   [Jul-06-18 08:43AM  Kiplinger]
▶ Pulte Homes downsizes plans for Broward golf course   [Jul-03-18 02:44PM  American City Business Journals]
▶ Construction robots could lead to lower home prices   [Jun-26-18 01:20PM  Yahoo Finance Video]
▶ New home sales still well below historic norms of demand   [Jun-25-18 02:13PM  CNBC Videos]
▶ Investors Are Undervaluing PulteGroup Inc (NYSE:PHM) By 14.69%   [Jun-21-18 12:18PM  Simply Wall St.]
▶ Life Tested, Now Connected   [Jun-19-18 08:00AM  Business Wire]
▶ PulteGroup Has Broken Out on the Upside   [Jun-12-18 03:21PM  TheStreet.com]
▶ Top 5 hottest and slowest markets for home sales   [Jun-07-18 01:40PM  Yahoo Finance Video]
▶ How millennials are priced out of first-time home buying   [May-29-18 01:14PM  Yahoo Finance Video]
▶ Lack of inventory is creating a tight housing market   [01:08PM  Yahoo Finance Video]
▶ A Six-Pack Of Homebuilding Buys   [May-25-18 10:18AM  Forbes]
▶ The Housing Market May End Up Climbing a Wall of Worry   [May-11-18 04:47PM  InvestorPlace]
▶ 6 Stocks That Can Soar With The Dollar   [02:30PM  Investopedia]
▶ Top NasdaqGS Defensive Stocks To Buy   [Apr-30-18 04:05PM  Simply Wall St.]
▶ Company News for Apr 25, 2018   [10:01AM  Zacks]
▶ PulteGroup: 1Q Earnings Snapshot   [06:53AM  Associated Press]
▶ PulteGroup, Inc. to Host Earnings Call   [06:30AM  ACCESSWIRE]
▶ Yahoo Finance Live: Midday Movers - Apr 16th, 2018   [09:40AM  Yahoo Finance Video]
▶ What Pulte has planned for former Elizabeth apartment community   [07:32AM  American City Business Journals]
▶ This developer is investing $40M into a 464-acre master-planned community in east Mesa   [Apr-12-18 03:21PM  American City Business Journals]
▶ Edited Transcript of PHM presentation 6-Mar-17 3:25pm GMT   [Apr-10-18 03:20PM  Thomson Reuters StreetEvents]
▶ Pulte to build affordable townhouses in Palm Beach County   [12:53PM  American City Business Journals]
▶ Loudoun's aversion to new single-family homes driving surge in this type of housing   [Apr-06-18 11:20AM  American City Business Journals]
▶ "Fast Money" final trades: HD, FDX and more   [Mar-22-18 05:59PM  CNBC Videos]
▶ When To Sell Stocks: Get Ready For An Exit When The Group's Leaders Crumble   [Mar-19-18 08:45PM  Investor's Business Daily]
▶ [$$] Bill Pulte, Who Made Home-Building a Big Business, Dies at 85   [Mar-07-18 09:21PM  The Wall Street Journal]
Financial statements of PHM
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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