PulteGroup Is Down But Not Out—Here’s What Wall Street Missed

Written by Gabriel Osorio-Mazilli

Wall Street analysts are inherently cautious; they usually prefer to play it safe to safeguard their careers and reputation. In the homebuilding segment of real estate, these analysts adopted a bearish outlook, lowering price targets for major U.S. builders. Although caution is justified at times, recent market signals indicate there may be one final rally in the sector.

Shares of PulteGroup Inc. (NYSE: PHM) are up nearly 1% after reporting its quarterly earnings results, which were mixed at best when taken at face value. Today, investors are interested in buying this stock on the dip, as PulteGroup now trades at 80% of its 52-week high, placing it at the tipping point between bull market and bear market territory. Surely, this discount increases the margin of safety in the stock, but it doesn’t mean there are clear skies ahead for PulteGroup.

Digging into the quarterly financials will guide investors regarding where the risks are coming from and what PulteGroup is doing to navigate today’s real estate slowdown. The easiest way to arrive at this take is by understanding the company’s key performance indicators (KPIs) and where they are taking PulteGroup this quarter.

It’s an Industry Issue, Not a Company One

PulteGroup reported $4.2 billion in homebuilding revenue, slightly below the $4.3 billion from the same quarter last year. Gross margins on home sales also declined to 26.2% from 28.8%. While these changes may appear modest, they reflect growing pressure on pricing power amid softening housing demand and rising construction costs. Tariffs on key inputs like steel and lumber have added to material inflation, making it increasingly difficult for homebuilders to preserve margins.

More than just materials, there are also the costs of buying and financing a home. Mortgage rates still hover around 6.4% as of October 2025, a lot more expensive than most homebuyers would like, keeping most prospective homeowners on the sidelines.

All of this is to say that it isn’t a PulteGroup issue specifically, but an industry dynamic that is likely hurting other homebuilders as well. This would explain why Wall Street analysts decided to downgrade them in bulk over the past few weeks.

On the orders side, PulteGroup reported a 6% decline over the year, which is consistent with the steady decrease in building permits for the United States. However, not all of this news is bad for PulteGroup, as the company did have some positive things to say about the quarter.

There is still a unit backlog of 9,888 homes, valued at $6.2 billion, which could translate into booked revenue and earnings by the time these permits are fulfilled. This event could come sooner rather than later, considering the Federal Reserve looks to cut interest rates further into the end of 2025.

Then comes the community count, which measures the homebuilder’s market share in this type of construction. With a total of 1,002 communities, PulteGroup reports a 5% increase compared to last year. Although orders are slowing now, a future rebound can bring an equal (or larger) growth rate to revenues on this expanded footprint.

How Investors Can Go About This

Allspring Global Investments Holdings is taking a similar approach, increasing its positions by 4.3% in October 2025. The timing of this purchase aligns with the stock’s discounted price just before the earnings recovery, with the group holding a stake of $116.9 million today.

This serves as a timing tool for investors to consider the weekly range (before earnings) as a potential buying zone, one that also shook out many bearish bettors. Over the past month, PulteGroup’s short interest collapsed by 23.2% to show signs of capitulation.

As the stock’s price fell to levels seen in some of these real estate slowdowns, chances are the scale has tilted in favor of buyers, especially if these Fed cuts begin to spark new building permit activity and encourage homebuyers to purchase new homes on more affordable terms.

If this is the case, Wall Street analysts may want to reconsider their bearish calls on these homebuilders, as the structure of what drives profits improves and warrants a change in ratings. However, it is key for investors to act before that happens, and this institutional buying / short-selling shakeout may be a pillar to lean on for that decision.

READ THIS STORY ONLINE

Why KO, WMT, and WFC surge at specific times every year (Ad)

There’s a little-known market force that’s been quietly pushing certain stocks higher at the same time every year — for decades. It’s shown remarkable consistency across names like KO, WMT, and WFC, giving traders who know how to spot it a repeatable edge. I recently broke down how this pattern works, the key chart data behind it, and how to position for the next potential move.

TAP HERE NOW TO WATCH THE FULL BREAKDOWN

Cleveland-Cliffs Breaks to New Highs on Earnings, More Upside?

Written by Gabriel Osorio-Mazilli

One of the most overlooked corners of the U.S. economy—the basic materials sector—just reminded investors why it’s worth paying attention. Shares of Cleveland-Cliffs Inc. (NYSE: CLF) soared more than 24% in a single day after the company reported earnings.

This business’s share price was already low pre-rally, offering a strong risk-to-reward ratio. Now that it has hit a new 52-week high, investors may wonder if there’s more upside. Analyzing industry dynamics can help those still deciding.

Zooming out a bit from Cleveland-Cliffs, and why there’s still a technical reason to expect further highs, investors can consider the performance spread between the S&P 500 index and the Materials Select Sector SPDR Fund (NYSEARCA: XLB), creating enough headroom for companies in this space to carry out a further bull run in the coming months, especially as the broader economic environment serves as a tailwind for this scenario to take place.

Breaking Down the Cleveland-Cliffs Quarter

Bears noted that Cleveland-Cliffs reported lower volume and revenue, with four million net tons earning $4.7 billion, down 4% from last year’s $4.9 billion. However, how revenue was generated matters more. The company’s revenue distribution is shifting towards infrastructure and automotive projects, linking this change to current tariffs and clarifying the rally for investors.

After President Trump implemented tariffs on foreign-assembled vehicles and imported steel, most participants began to expect a severe slowdown in domestic activity and production. However, the end result was support for the industry, as companies began seeking producers like Cleveland-Cliffs to circumvent these tariffs.

In fact, Lourenco Goncalves (Cleveland-Cliffs’ CEO) mentioned in the earnings release that all major original equipment manufacturers (OEMs) locked in multi-year agreements to have this steelmaker as their main provider. This not only enhances the company’s pricing power but also diversifies a nearly guaranteed stream of revenue moving forward.

This results in some balance sheet strengthening, and the net liquidity of $3.1 billion for the quarter demonstrates that Cleveland-Cliffs is well-positioned to capitalize on a rebound in the industry as a whole. In addition to these benefits, the company can begin to command a premium compared to its peers in the space, as its strength starts to translate into higher prices.

How Markets Feel About Cleveland-Cliffs Now

After pushing the stock into bear market territory, most participants would be remiss to remain bearish on this company, not only because of its momentum, but also for what it has in store for the future. That future is synonymous with bullish outcomes, and State Street knows this to be the case in Cleveland-Cliffs stock. State Street increased its stake in the steelmaker by 20.2% in August 2025, bringing its net position to a high of $208.6 million as of today.

These institutional buyers aren’t alone in this view, as markets have brought Cleveland-Cliffs stock to a price-to-book (P/B) ratio of 1.2x today, a premium of 41% compared to the steel industry’s average P/B of only 0.84x. This is where some investors may become wary of being exposed to the stock, as they believe it is now overvalued in retrospect.

Markets often assign premium valuations to companies that consistently outperform both their peers and the broader S&P 500—a pattern Cleveland-Cliffs has followed in recent quarters.

Looking ahead, expectations for a strong rebound remain high. With multi-year supply agreements in place, growing demand from infrastructure and automotive partners, and policy tailwinds from tariffs, Cleveland-Cliffs is positioned to deliver a meaningful turnaround in profitability. Becoming a go-to supplier for major OEMs and a key player in U.S. infrastructure buildouts gives the company a platform for long-term revenue growth and margin expansion.

READ THIS STORY ONLINE

Wall Street Will Be Blindsided (Ad)

Apple’s Next Big Move Will Shock Wall Street

Everyone’s watching Apple’s AI plans — but the real shock is hidden in Patent #11528076. One small partner holds the key. Before Wall Street catches on, see Alex Green’s urgent insight on this secret opportunity.

CLICK HERE TO LEARN MORE ABOUT THIS OPPORTUNITY.

Is Landstar the Next Big Winner in Transportation Stocks?

Written by Gabriel Osorio-Mazilli

The stock market is a rational machine, sometimes pricing in economic developments and other events into company valuations. While some of these opinions are valid for a period, they become overstretched and irrational, which is where savvy investors can step in and collect profits on a relatively low-risk basis. In today’s environment, the transportation sector is one such area of opportunity.

With shares of J.B. Hunt Transport Services Inc. (NASDAQ: JBHT) rallying by over 26% in a single month, some of the bearish opinions surrounding the transportation sector may begin to fade away in the coming months. Such an extreme (or bearish complacency) can be seen in the First Trust Nasdaq Transportation ETF (NASDAQ: FTXR), whose top holdings are concentrated on airline stocks rather than trucking, an imbalance that could soon be corrected.

However, the risk of tariffs and inflation remains present, so while J.B. Hunt came out a winner in its latest quarterly report, there is one stock that is better positioned to deliver a similar reaction to its shareholders. That stock is Landstar Systems Inc. (NASDAQ: LSTR), which, by association as well as its own merits, can bring about double-digit percentage growth to portfolios in the coming months through its business model.

Sentiment Confirmation by Association

J.B. Hunt’s rally could help bring back some positive sentiment to the transportation industry and the FTXR exchange-traded fund, but most of the upside is probably already priced in after this big move. However, that doesn’t mean all opportunity is lost, as there is now a possibility that these effects can spill over to other parts of the industry.

This is where Landstar comes into play, a name that should be correlated with what J.B. Hunt stock just did, as they are part of the same industry. More than just being associated through the industry, the higher demand for trucking and robust logistics across the United States creates a specific opportunity in Landstar.

Landstar is not just a trucking and logistics company; it also offers a software-as-a-service (SaaS) aspect. However, before investors delve into the financial benefits and leverage this company has at its disposal to deliver further upside, there is one thing to keep in mind.

Landstar stock is up 6% in one week already, showing signs of pre-earnings optimism as they report on Oct. 28, but also confirmation that J.B. Hunt’s admission of higher demand and industry recovery can bring a few bulls to land on Landstar as well.

How Landstar’s Business Makes It a Good Pick

Returning to the software exposure in Landstar, this company boasts a gross profit margin of 19.6%, which is slightly higher than J.B. Hunt’s 18.9%. However, this tells investors very little about the business’s efficiency, and not much more than just pricing power and service optimization.

A more accurate gauge for investors to consider when evaluating Landstar’s follow-up rally to J.B. Hunt is the balance sheet comparison between these two companies. Whereas J.B. Hunt carries over $8 billion in total assets, Landstar is able to generate better margins on just $1.7 billion in assets.

That nimbleness can come in handy during markets like today’s, where the tariff uncertainty affecting demand cycles can create pressures and bottlenecks for trucking companies. In addition to being a nimble business, Landstar’s revenue can also be diversified through its logistics software segment.

In times like these, higher costs could drive operators to seek out cost-saving benefits through technology, and Landstar’s services can fulfill that need and already are fulfilling. Capacity utilization (sales divided by assets) for Landstar is just over 150%, compared to J.B. Hunt’s 48%, which is closer to the industry average.

What this means is that Landstar’s business can operate at high demand and throughput thanks to the software leverage it carries, creating a tailwind of additional earning power when the traditional trucking business picks back up (as it is now). All told, here is what investors need to take away from Landstar’s next quarter.

If J.B. Hunt was able to rally by this much, being a less nimble and diversified business, then Landstar can do just as well, if not better, should they report a strong quarter. Speaking of earnings, the MarketBeat consensus expects to see $1.45 in earnings per share (EPS) for the second quarter of 2026, a jump of 21% from the latest EPS of $1.20.

That should be enough to send the stock to new highs, especially as it now trades at 67% of its 52-week high. Recognizing the disconnect between future growth and current valuations, markets have assigned a premium valuation to Landstar, reflected in a price-to-book (P/B) multiple of 4.8x, compared to the transportation sector’s average of 2.4x P/B.

This premium indicates that the market expects high returns on Landstar stock, given its current setup and price discount, which offers an opportunity to boost earnings this quarter.

READ THIS STORY ONLINE

What happened in Vegas changed how I trade forever (Ad)

I just got back from Vegas, where a few lucky hands at the blackjack table reminded me how unpredictable gambling really is — 42% odds at best. That’s when I realized there’s a smarter way to aim for $500 wins without relying on luck. Over the past few weeks, my trading setup has hit 22 times in a row, each targeting that same $500 goal. This Sunday at 7 PM, I’m going live to show exactly how it works — step by step.

CLICK HERE TO RESERVE YOUR FREE SEAT FOR SUNDAY’S $500 CHALLENGE