Bank of America just raised its EUR/USD forecast
Investing.com -- S&P Global Ratings has upgraded PulteGroup Inc (NYSE:PHM). to ’BBB+’ from ’BBB’ with a stable outlook, citing the homebuilder’s solid credit metrics and strong financial position.
The Atlanta-based company has repaid more than $1.1 billion of senior notes since 2021, reducing its total outstanding debt to below $1.6 billion at the end of 2024, down from about $2.8 billion in 2020. During this period, PulteGroup’s adjusted EBITDA increased to $3.9 billion from just under $2 billion.
S&P Global expects PulteGroup’s 2025 adjusted EBITDA to moderate to approximately $3 billion due to more cautious homebuyer sentiment. However, with year-end balance sheet cash projected to be around $2 billion, the company’s debt to EBITDA ratio is forecast to remain below 0.5x through 2026.
The rating agency noted that PulteGroup is better positioned than in previous cycles to withstand softer market conditions. During the 2005 housing peak, the company had leverage of 1.6x, compared to just 0.6x in 2022. As of December 2024, PulteGroup was generating about 29.5% gross margins with adjusted debt of approximately $955 million.
S&P Global anticipates gross margins will trend downward to about 26.5% in 2025 due to higher land costs and sales incentives, but notes these margins remain higher than pre-pandemic levels. The company maintains the highest gross margins among all homebuilders rated by S&P Global.
PulteGroup is the third-largest builder in the United States behind D.R. Horton and Lennar (NYSE:LEN), with $17.9 billion in revenue and 31,219 closings in 2024. The company operates in about 35 of the top 50 U.S. markets, with top 10 positions in each and top five positions in 25 of them.
The stable outlook reflects S&P Global’s expectations that over the next 24 months, PulteGroup will maintain debt to EBITDA below 1x, providing a cushion against volatility should the new home market slow more than expected.
The rating agency indicated that further upgrades would depend more on improvements in PulteGroup’s overall business risk profile rather than additional strengthening of its already conservative financial metrics.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.