1-Star Stocks Poised to Plunge: PulteGroup?

Before you go, we thought you'd like these...
Before you go close icon

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, homebuilder PulteGroup (NYS: PHM) has received the dreaded one-star ranking.

With that in mind, let's take a closer look at PulteGroup's business and see what CAPS investors are saying about the stock right now.

PulteGroupfacts

Headquarters (Founded)Bloomfield Hills, Mich. (1956)
Market Cap$2.1 billion
IndustryHomebuilding
Trailing-12-Month Revenue$4.06 billion
Management

Chairman/CEO Richard Dugas, Jr.

CFO Robert O'Shaughnessy

Return on Equity (Average, Past 3 Years)(33%)
Cash/Debt$1.14 billion / $3.38 billion
Competitors

D.R. Horton (NYS: DHI)

Lennar (NYS: LEN)

Toll Brothers (NYS: TOL)

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 54% of the 1,274 members who have rated PulteGroup believe the stock will underperform the S&P 500 going forward. These bears include All-Stars ibarz and Chemdawg, both of whom are ranked in the top 5% of our community.

Just last month, ibraz succinctly summed up the PulteGroup bear case: "No market for new houses. Zero. Wait till at least 2 years."

Currently, PulteGroup even sports an alarming debt-to-equity of 176%. That's higher than that of competitors like D.R. Horton (73%), Lennar (125%), and Toll Brothers (63%).

CAPS All-Star Chemdawg expands on the underperform argument:

[S]till losing money ... but the market is flattening out and buyers will be starting to buy again ... but existing homes will go first and there are still quite a few of them left. [U]ntil then I am bearish on [PulteGroup] since they are still losing money ... if you want a homebuilder with a profitable business, take a look at [Lennar], not only are they profitable (even in Florida), but they replaced any of their homes that were built with Chinese Drywall for free and that makes the quality and reputation hard to beat.

What do you think about PulteGroup, or any other stock for that matter? If you want to retire rich, you need to protect your portfolio from any undue risk. Staying away from dangerous stocks is crucial to securing your financial future, and on Motley Fool CAPS, thousands of investors are working every day to flag them. CAPS is 100% free, so get started!

Interested in another easy way to track PulteGroup? Add it to your watchlist.

At the time this article was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners