PHM: Hold + Reduce
Published 17 Sep 2026, 10:48 BST. This is the frozen version, not the current recommendation.
Why this assessment was issued
First recorded assessment.
The central target is 13.8% below the price. The decline falls short of the 15% Sell requirement.
Supporting evidence
Capital earns more than at peers
Return on invested capital: 13.1% for PHM, against 10.5% across 12 comparable peers.
Borrowing is lower relative to earnings
Net debt / EBITDA: 0.4× for PHM, against 1.2× across 12 comparable peers.
Opposing evidence
The profit margin narrowed
The latest quarterly operating margin was 11.1%, -7.2 percentage points from a year earlier. Compare the sales and margin contributions below.
Year-to-date profit is lower
Across 2 completed quarters since 2025-12-31, net income was 819.0m versus 1,131.3m in the matching prior-year periods (USD). Check whether the latest quarter changes that direction.
The original scenarios
| Scenario | Sales growth | Profit margin | Model value |
|---|---|---|---|
| Weaker | -12.9% | 12.5% | $75.95 |
| Central | -7.9% | 13.9% | $101.98 |
| Stronger | -2.9% | 15.3% | $133.30 |
Method: Earnings and historical valuation. A sufficiently complete, positive earnings record allows the stock's own P/E history to be used. These scenarios are not probability intervals.
Original assumptions and checks
| eps | 10.11 |
|---|---|
| cash | 1335709000.0 |
| debt | 2298181000.0 |
| years | 1.215605749486653 |
| growth | -7.937602490100676 |
| margin | 11.619669464565167 |
| profit | 1906448000.0 |
| cash_ok | True |
| debt_ok | True |
| growths | [-1.5982469614698736, -6.319768767242184, -12.435692908429985, -9.555436212959167] |
| revenue | 16407076000.0 |
| downside | 35.778576827745354 |
| leverage | 0.38346720214190094 |
| multiple | 9.31629392971246 |
| free_cash | 1512443000.0 |
| buy_hurdle | 16.12490708883661 |
| volatility | 32.24981417767322 |
| history_end | 2026-09-11 |
| reward_risk | 0.0 |
| annual_years | 5 |
| usable_weeks | 157 |
| history_start | 2023-09-15 |
| history_weeks | 157 |
| financial_date | 2026-06-30 |
| interest_cover | 4783.811775975095 |
| operating_cash | 1626318000.0 |
| uncapped_growth | -7.937602490100676 |
| current_multiple | 11.6973293768546 |
| projected_margin | 13.911068621007589 |
| historical_margin | 16.20246777745001 |
Recent price · Passed. Weekly close dated 2026-09-11.
Suitable business model · Passed. Value operating cash flow or comparable earnings; deduct debt and other ownership claims where appropriate.
Four quarters · Passed. Four quarters ending 2026-06-30.
Current financials · Passed. Statements through 2026-06-30; factor prices dated 2026-09-11.
Annual record · Passed. 5 consecutive annual profit margins, including loss years.
Comparable earnings history · Passed. P/E is usable in 157 of 157 weeks. At least 52 usable weeks and 70% coverage are required; excluding too many loss or missing weeks would bias the target.
Earnings and price dates · Passed. Earnings-release EPS $10.11, for four quarters ending 2026-06-30.
Price risk · Passed. Risk uses the latest 52 weekly price changes.
Comparable sales growth · Passed. Growth uses the median of four quarterly year-on-year comparisons.
Positive statement earnings · Passed. Trailing statement profit is positive.
Earnings reconciliation · Passed. Release EPS is $10.11; statement-derived EPS is $10.01. The difference is within the 5% review threshold; this does not prove there are no unusual items.
Statement totals · Passed. The latest four quarters agree with the trailing snapshot within 5%.
Cash and borrowing · Passed. Cash generation, debt and interest-cover figures are available.
Target publication review · Passed. The model estimate is within SM's automatic publication range of one quarter to four times the current price. This is a review threshold, not evidence that the market price is correct.
Policy sm-review-2-research · Model sm-assessment-14-operating-capital · Data d82d14e2b6a7.