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InvestorGuide Stock Analysis

First Major Consolidation in Home-Building Industry, Pulte Homes acquires Centex
Excerpt from the InvestorGuide.com Stock of the Day on 4/8/2009

The recession's first major consolidation in battered home-building industry will take place with Pulte Homes agreeing to buy rival Centex Corp. (CTX: Charts, News, Offers) for about $1.3 billion in stock. The companies came to a deal after Centex lost 70 percent of its value in the past year, while Pulte lost 30 percent. Creating the largest U.S. homebuilder by revenue, both companies are betting that consolidation will increase the chances of surviving the worse housing crash since the Great Depression. Will their bet payoff?

The combined companies will have a large presence throughout the country, selling homes in 59 U.S. markets. The merger gives Pulte access to states with stronger new home sales such as Texas and the Carolinas. The two companies together sold almost 40,000 homes last year. The combined company will be the largest U.S. home builder with a market capitalization of $4.1 billion, beating out D.R. Horton Inc. (DHI: Charts, News, Offers), with a market capitalization of $3.4 billion. Complimentary geographic presence and market segments will mean big annual savings of up to $350 million annually for the new company. The savings includes $250 million in overhead and $100 million in debt-expense relief. More >

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Morningstar Analysis for Pulte Homes

Pulte Homes (PHM) Upgrades

Date
Analyst
Old Rating
New Rating
11/18/2009
Citigroup
Hold
Buy
06/05/2009
Credit Suisse
Underperform
Neutral
02/24/2009
Credit Suisse
Underperform
Neutral
10/28/2008
Citi
Hold
Buy
01/24/2008
Raymond James
Underperform
Market Perform
12/03/2007
Merrill Lynch
Sell
Neutral

Pulte Homes (PHM) Downgrades

Date
Analyst
Old Rating
New Rating
04/02/2009
Credit Suisse
Neutral
Underperform
04/24/2008
S&P Equity Research
Hold
Sell
02/01/2008
Merrill Lynch
Neutral
Sell
07/02/2007
Citigroup
Buy
Hold
04/09/2007
Credit Suisse
Underperform
Neutral
10/03/2006
Banc of America
Sell
Neutral

Pulte Homes (PHM) New Coverage

Date
Analyst
Rating
No new coverage listed for PHM at this time.
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Competitor Analysis

Centex
Comstock Homebuilding Companies
Standard Pacific Lp
NVR
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