Is PulteGroup (PHM) Worth Investing In?

PulteGroup (PHM) has an average brokerage recommendation (ABR) of 1.94, indicating a Strong Buy/Buy rating. Of the 16 recommendations, nine are Strong Buy and one is Buy. While brokerage recommendations may not be entirely reliable, they can be used to validate other research or indicators, such as the Zacks Rank, which has a proven track record of predicting a stock's price movement.

PulteGroup (PHM) has recently received an average brokerage recommendation (ABR) of 1.94, indicating a Strong Buy/Buy rating. This rating is based on the actual recommendations (Buy, Hold, Sell, etc.) made by 16 brokerage firms. Of the 16 recommendations, nine are Strong Buy and one is Buy, accounting for 56.3% and 6.3% of all recommendations, respectively [1].

While brokerage recommendations can influence stock prices, their reliability in guiding investors to pick stocks with the best price increase potential is limited. Brokerage firms often have a strong positive bias in their ratings due to their vested interest in the stocks they cover. According to research, for every "Strong Sell" recommendation, brokerage firms assign five "Strong Buy" recommendations [1].

To make a more informed investment decision, it is advisable to validate brokerage recommendations with other indicators, such as the Zacks Rank. The Zacks Rank is a proprietary stock rating tool that classifies stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell). It is driven by earnings estimate revisions and has an impressive externally audited track record [1].

For PulteGroup, the Zacks Consensus Estimate for the current year has declined 0.2% over the past month to $11.34. This decline, along with other factors, has resulted in a Zacks Rank #4 (Sell) for the company. This suggests that the stock may be more likely to underperform in the near term [1].

In conclusion, while the average brokerage recommendation for PulteGroup indicates a Strong Buy/Buy rating, it is important to consider other indicators, such as the Zacks Rank, to make a more informed investment decision. The ABR should not be the sole basis for an investment decision, but rather a tool to validate other research or indicators.

References:
[1] https://www.allpennystocks.com/newswires/8908857/is-pultegroup-phm-a-buy-as-wall-street-analysts-look-optimistic
[2] https://finance.yahoo.com/news/worth-investing-pultegroup-phm-based-133004118.html