PulteGroup’s latest filing reveals a widening gap between reported earnings and actual cash generation. Revenue over the twelve months to Q3 2026 was $15.98 billion, a decline of 9.3% compared to the prior year. This growth rate represents a drop of 2.1 percentage points from the rate recorded a quarter earlier.
What stands out
Reported profit and cash are moving at different speeds. Net income fell 31.7% over the year, while free cash flow declined by 16.3%. The divergence highlights that the drop in accounting profit outpaced the reduction in cash available to shareholders.
Less of the cash generated was left over after reinvestment.
Net income over the twelve months was $1.80 billion, which fell 31.7% on the year before. This decline in absolute profit reflects the pressure on the income statement.
Margins have also tightened as a result. The trailing net margin stood at 11.2%. This figure places the current profitability level in context against the revenue base of $15.98 billion.
Cash flow
Operating cash flow over the twelve months was $1.41 billion, down 15.6% on the year before. This reduction in cash inflow from core operations sets the starting point for free cash generation.
Capital spending remained a small portion of the business. It totaled $109.5 million, or 0.7% of revenue. This low level of reinvestment relative to sales means that most operating cash flows through to free cash flow.
Free cash flow, defined as operating cash flow less capital spending, was $1.30 billion. This figure is down 16.3% on the year before. The decline mirrors the drop in operating cash flow more closely than the drop in net income.
The efficiency of cash conversion has slipped slightly. Free cash flow was 8.1% of revenue, a metric known as the free-cash-flow margin. This margin is down 0.7 percentage points from a year earlier, indicating a smaller share of each sales dollar is being retained as free cash.
In context
Today’s free-cash-flow margin of 8.1% is higher than 45% of the company’s own past quarterly readings. Historical quarterly margins have ranged from −12.4% to 22.9%. This places the current efficiency level near the middle of the company’s historical distribution.
Today’s twelve-month revenue growth rate of −9.3% is higher than 5% of the company’s own past quarterly readings. The historical range for this metric spans from −22.8% to 28.2%.
What it means for value
Our model shows high sensitivity to changes in growth assumptions. If growth were 5 percentage points lower, the value would lower by 23.7%.
The model also reacts to changes in cash efficiency. That sensitivity shows how much the valuation leans on holding current cash conversion levels.
What to watch
The next filing will show whether the divergence between net income and free cash flow continues or narrows. It will also reveal if the decline in operating cash flow stabilizes relative to capital spending. Finally, it will provide updated data on the free-cash-flow margin to see if the recent compression persists.
