Hovnanian Enterprises (NYSE:HOV) Releases Quarterly Earnings Results, Beats Estimates By $1.58 EPS

Hovnanian Enterprises (NYSE:HOV) announced its quarterly earnings results on Thursday. The construction company reported ($0.46) earnings per share (EPS) for the quarter, beating analysts’ consensus estimates of ($2.04) by $1.58, Zacks reports. The firm had revenue of $667.65 million for the quarter, compared to the consensus estimate of $626.40 million. Hovnanian Enterprises had a return on equity of 14.14% and a net margin of 1.92%.

Here are the key takeaways from Hovnanian Enterprises’ conference call:

• Hovnanian said Q2 results beat guidance on key profitability metrics, with adjusted gross margin of 14.3% above the top end of forecast and adjusted EBITDA of $41 million above expectations.
• The company highlighted that adjusted gross margin improved sequentially from Q1, which management believes marked the trough, and expects further margin improvement as newer communities begin delivering.
• Demand remained choppy but resilient, with contracts slightly above last year and May month-to-date contracts up 12% year over year, though management said consumer confidence and geopolitical uncertainty continue to weigh on sales.
• Incentives declined sequentially for the first time in nearly two years, while quick move-in inventory was reduced to 731 homes and finished QMIs fell sharply, which should help margins over time.
• The balance sheet remained strong, with $442 million of liquidity, further debt reduction progress, and management reiterating that the company is positioned to use cash selectively for land, stock buybacks, and other disciplined capital allocation.

Hovnanian Enterprises Stock Performance

HOV stock opened at $115.69 on Friday. The company has a market cap of $687.22 million, a P/E ratio of 17.72 and a beta of 1.87. Hovnanian Enterprises has a 1 year low of $85.69 and a 1 year high of $162.05. The company has a debt-to-equity ratio of 0.04, a current ratio of 1.50 and a quick ratio of 0.43. The stock’s fifty day moving average price is $109.16 and its 200-day moving average price is $113.82.

Institutional Trading of Hovnanian Enterprises

A number of hedge funds have recently bought and sold shares of the company. State Street Corp boosted its position in Hovnanian Enterprises by 8.6% in the fourth quarter. State Street Corp now owns 228,613 shares of the construction company’s stock worth $22,299,000 after purchasing an additional 18,086 shares during the last quarter. Dimensional Fund Advisors LP increased its position in shares of Hovnanian Enterprises by 2.0% during the 4th quarter. Dimensional Fund Advisors LP now owns 175,186 shares of the construction company’s stock valued at $17,089,000 after purchasing an additional 3,514 shares during the last quarter. GW&K Investment Management LLC lifted its stake in shares of Hovnanian Enterprises by 7.6% in the 4th quarter. GW&K Investment Management LLC now owns 121,488 shares of the construction company’s stock worth $11,850,000 after purchasing an additional 8,571 shares during the period. Geode Capital Management LLC lifted its stake in shares of Hovnanian Enterprises by 1.0% in the 4th quarter. Geode Capital Management LLC now owns 111,600 shares of the construction company’s stock worth $10,888,000 after purchasing an additional 1,057 shares during the period. Finally, Towle & Co. boosted its holdings in shares of Hovnanian Enterprises by 51.2% in the fourth quarter. Towle & Co. now owns 99,402 shares of the construction company’s stock worth $9,696,000 after buying an additional 33,681 shares during the last quarter. Hedge funds and other institutional investors own 65.40% of the company’s stock.

Wall Street Analyst Weigh In

Several equities research analysts recently commented on HOV shares. Weiss Ratings downgraded Hovnanian Enterprises from a “hold (c)” rating to a “hold (c-)” rating in a report on Friday, May 8th. Citizens Jmp started coverage on shares of Hovnanian Enterprises in a report on Thursday, April 9th. They set a “market underperform” rating and a $74.00 price target on the stock. Finally, Wall Street Zen upgraded shares of Hovnanian Enterprises from a “sell” rating to a “hold” rating in a research note on Saturday, February 28th. Three research analysts have rated the stock with a Hold rating and one has issued a Sell rating to the stock. According to data from MarketBeat.com, Hovnanian Enterprises has an average rating of “Reduce” and an average target price of $97.00.

Hovnanian Enterprises Company Profile

Hovnanian Enterprises, Inc is a publicly traded homebuilding company primarily engaged in the acquisition, development and construction of residential properties. Headquartered in Red Bank, New Jersey, the company operates through a network of regional homebuilding divisions that design and deliver a range of housing solutions, including single-family detached homes, townhomes and condominiums. Hovnanian combines land development, architectural design and construction services with in-house mortgage and insurance offerings to provide a comprehensive homebuying experience.

The company markets its communities under several branded product lines tailored to different buyer segments and price points.