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PulteGroup, Inc. (PHM) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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PulteGroup, Inc. (PHM)

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Intrinsic Value (DCF)

Current$132.87
→
Intrinsic$260.25
+96%
$176.28$260.25$419.57
Market implies 8% growth for 5 years
DCF analysis suggests PHM could have 96% upside at 25% growth — verify assumptions match your view.
At $133, the market prices in 8% annual cash flow growth — a moderate expectation aligned with historical trends (25%).
Range: Bear $176 → Bull $420. Current price implies expectations below the bear case — very conservative expectations.
Discount ↓Growth →21%23%25%27%
8%$321$347$375$404
10%$224$241$260$280
12%$170$183$197$212
14%$136$146$157$169

Bull Case

  • Bull case ($420) offers 216% upside at 30% growth, 9% discount
  • Price below even worst-case scenario — strong margin of safety
  • Market-implied growth (8%) ≤ historical CAGR (25%)

Bear Case

  • Bear case ($176) with 20% growth, 12% discount rate
  • Using 25% growth — aggressive, watch for mean reversion
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5-Year Free Cash Flow Projection

Year 1$1.95B
Year 2$2.44B
Year 3$3.05B
Year 4$3.81B
Year 5$4.77B
Terminal$70.15B

📐 Model Inputs

Growth Rate25.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$1.56BTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is PHM stock undervalued or overvalued?
🟢 UNDERVALUED

PHM trades at $132.87 vs. our DCF-derived intrinsic value of $215.10, implying +78% upside. At a 10.0% WACC and 25.0% projected FCF growth, the market appears to be underpricing the present value of PHM's future cash flows. The bear case ($140.10) still suggests upside, providing margin of safety.

What is PHM's intrinsic value?

Using a 5-year DCF model: Base FCF of $1.56B, projected at 25.0% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 10.0% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $601M net debt and dividing by 0.21B shares: Bear $140.10 | Base $215.10 | Bull $325.54. Current price $132.87 implies +78% to base case.

How is PHM's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 25.0% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=10.0%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($45.73B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 29.3x.