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

Hovnanian Enterprises (NYSE:HOV) released its earnings results on Thursday, May 21st. The construction company reported ($0.46) earnings per share for the quarter, beating the consensus estimate of ($2.04) by $1.58, Zacks reports. Hovnanian Enterprises had a net margin of 1.25% and a return on equity of 11.20%. The business had revenue of $667.65 million during the quarter, compared to analysts’ expectations of $626.40 million.

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 Price Performance

Shares of HOV traded up $1.56 during mid-day trading on Tuesday, hitting $115.15. 83,705 shares of the company traded hands, compared to its average volume of 121,872. Hovnanian Enterprises has a one year low of $85.69 and a one year high of $162.05. The company has a current ratio of 1.50, a quick ratio of 0.43 and a debt-to-equity ratio of 0.04. The business has a 50-day moving average of $109.61 and a 200 day moving average of $113.20. The stock has a market capitalization of $683.97 million, a price-to-earnings ratio of 30.94 and a beta of 1.84.

Analysts Set New Price Targets

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

Institutional Inflows and Outflows

A number of large investors have recently added to or reduced their stakes in HOV. State Street Corp raised its holdings 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 period. Dimensional Fund Advisors LP grew its holdings in shares of Hovnanian Enterprises by 2.0% in the 4th quarter. Dimensional Fund Advisors LP now owns 175,186 shares of the construction company’s stock valued at $17,089,000 after buying an additional 3,514 shares during the period. GW&K Investment Management LLC grew its holdings 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 valued at $11,850,000 after buying an additional 8,571 shares during the period. Geode Capital Management LLC increased its position 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 valued at $10,888,000 after buying an additional 1,057 shares in the last quarter. Finally, Towle & Co. increased its position in shares of Hovnanian Enterprises by 51.2% in the 4th quarter. Towle & Co. now owns 99,402 shares of the construction company’s stock valued at $9,696,000 after buying an additional 33,681 shares in the last quarter. 65.40% of the stock is currently owned by institutional investors and hedge funds.

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.