StockStory advises avoiding PulteGroup stock despite valuation

StockStory recommends that investors avoid PulteGroup (PHM) following a recent decline in the homebuilder's share price. The research firm states it is sitting out the stock, citing concerns about the company's long-term sales performance and declining returns on invested capital. PulteGroup's stock price fell to $109.26 over the past six months, resulting in a 9.6% loss for shareholders. This performance contrasts with the S&P 500, which climbed by 11.2% during the same period.

The firm attributes its bearish stance to PulteGroup's mediocre annualized revenue growth of 6.4% over the last five years. StockStory notes that this growth rate was below its standard for the industrials sector. The firm emphasizes that while short-term success is common, top-performing businesses typically sustain growth over many years.

Further compounding the concerns, PulteGroup's earnings per share (EPS) declined by 12.2% over the last two years. StockStory indicates that this drop exceeded the decline in revenue, suggesting the company struggled to adjust to shrinking demand. The firm also highlights a decrease in PulteGroup's return on invested capital (ROIC) over recent years. Although StockStory acknowledges past management performance, it views the declining returns as a symptom of fewer profitable growth opportunities.

Despite the lower entry price, StockGroup argues that the potential downside outweighs the upside. The stock currently trades at a forward price-to-earnings ratio of 10.8 times, which the firm considers fair but lacking in significant upside potential. Instead of buying PulteGroup, StockStory suggests investors look toward an "all-weather" company that owns Taco Bell.

The report also promotes a separate list of five growth stocks identified by the firm's AI tools. These include Meta, CrowdStrike, and Broadcom, which returned 315%, 314%, and 455%, respectively. Other names previously featured on the list include Nvidia, which gained 1,460% between June 2020 and June 2025, and Comfort Systems, which rose 1,154% over the same period.