Homebuilding company PulteGroup (NYSE: PHM) reported Q4 CY2025 results beating Wall Street’s revenue expectations, but sales fell by 6.3% year on year to $4.61 billion. Its GAAP profit of $2.56 per share was 9.5% below analysts’ consensus estimates.

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“PulteGroup’s fourth quarter and full year financial results reflect our balanced and disciplined approach to the business as we continue to successfully navigate today’s continuously shifting market dynamics,” said PulteGroup President and CEO, Ryan Marshall.

Company Overview

Having delivered over 850,000 homes since its founding in 1950, PulteGroup (NYSE: PHM) is one of America's largest homebuilders, constructing single-family homes, townhouses, and condominiums for first-time, move-up, and active adult buyers across 46 markets in 25 states.

Revenue Growth

A company’s long-term sales performance can indicate its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Luckily, PulteGroup’s sales grew at a solid 9.8% compounded annual growth rate over the last five years. Its growth beat the average industrials company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. PulteGroup’s recent performance shows its demand has slowed as its annualized revenue growth of 3.8% over the last two years was below its five-year trend.

We can better understand the company’s revenue dynamics by analyzing its backlog, or the value of its outstanding orders that have not yet been executed or delivered. PulteGroup’s backlog reached $5.27 billion in the latest quarter and averaged 10% year-on-year declines over the last two years. Because this number is lower than its revenue growth, we can see the company hasn’t secured enough new orders to maintain its growth rate in the future.

This quarter, PulteGroup’s revenue fell by 6.3% year on year to $4.61 billion but beat Wall Street’s estimates by 6%.

Looking ahead, sell-side analysts expect revenue to decline by 4.6% over the next 12 months, a deceleration versus the last two years. This projection doesn't excite us and suggests its products and services will face some demand challenges.

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Operating Margin

Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.

PulteGroup has been a well-oiled machine over the last five years. It demonstrated elite profitability for an industrials business, boasting an average operating margin of 20%. This result was particularly impressive because of its low gross margin, which is mostly a factor of what it sells and takes huge shifts to move meaningfully. Companies have more control over their operating margins, and it’s a show of well-managed operations if they’re high when gross margins are low.

Looking at the trend in its profitability, PulteGroup’s operating margin decreased by 2 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

In Q4, PulteGroup generated an operating margin profit margin of 14.2%, down 9.3 percentage points year on year. Since PulteGroup’s operating margin decreased more than its gross margin, we can assume it was less efficient because expenses such as marketing, R&D, and administrative overhead increased.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

PulteGroup’s EPS grew at a spectacular 16.3% compounded annual growth rate over the last five years, higher than its 9.8% annualized revenue growth. However, this alone doesn’t tell us much about its business quality because its operating margin didn’t improve.

We can take a deeper look into PulteGroup’s earnings to better understand the drivers of its performance. A five-year view shows that PulteGroup has repurchased its stock, shrinking its share count by 27%. This tells us its EPS outperformed its revenue not because of increased operational efficiency but financial engineering, as buybacks boost per share earnings.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For PulteGroup, its two-year annual EPS declines of 2.9% mark a reversal from its (seemingly) healthy five-year trend. We hope PulteGroup can return to earnings growth in the future.

In Q4, PulteGroup reported EPS of $2.56, down from $4.43 in the same quarter last year. This print missed analysts’ estimates, but we care more about long-term EPS growth than short-term movements. Over the next 12 months, Wall Street expects PulteGroup’s full-year EPS of $11.12 to shrink by 4.6%.

Key Takeaways from PulteGroup’s Q4 Results

We were impressed by how significantly PulteGroup blew past analysts’ revenue expectations this quarter. On the other hand, its EPS missed and its backlog fell slightly short of Wall Street’s estimates. Overall, this quarter could have been better. The stock remained flat at $123.50 immediately after reporting.

Is PulteGroup an attractive investment opportunity right now? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here (it’s free).