PulteGroup, Inc. (NYSE:PHM) finished its second consecutive down session with a heavy loss of 7.93% after it was hit by both a disappointing quarterly result and a pessimistic report from the US Department of Commerce. The government department reported that new home sales fell to an annualized rate of 481,000 units in March, much lower than the number of 510,000 expected by the economists and really weak compared to the February figure of 543,000.
Obviously, the fear of waning home sales was aroused and the street didn’t like any of the homebuilding stocks after the report and dumped all stocks like PulteGroup, Inc. (NYSE:PHM) with a vengeance. On the other hand, the company reported a lower net income of $55 million or $0.15 per share against the expectation of $0.20 per share for the quarter and $0.19 for the same quarter in the previous year. The consensus took a hit in the case of revenue too, which grew to $1.13 billion from $1.12 billion last year against the expectation of $1.24 billion. The first quarter home sales revenue came at $1.1 billion, reflecting a 2% increase in the average selling price offset by a 2% decrease in closings to 3365 homes.
Technically, the stock is standing right in the middle of the battleground for both the bulls and the bears. The 8% drop yesterday has brought the stock down to the last significant swing low registered in December 2014. Since then the stock hasn’t really traded beyond the range of $19.50-$23.50 and if the next session can’t manage a break, then the probability of the rangebound movement continuing gets much higher. The volume surged about 3 times higher than the daily average but follow-up selling is still required for the bears. Otherwise, the bulls may try to take the stock higher from the current levels.
