NEW YORK (TheStreet) --Hovnanian Enterprises (HOV) - Get Report  shares closed Tuesday's trading session down 3% to $1.94 even though home prices rose at the fastest annual rate since August 2014. 

The S&P Case-Shiller home price index gained 0.1% for the three month period ending in October, for a 5.5% annual gain, MarketWatch said.

However, this wasn't enough to send homebuilders stock up today, Barron' noted.

Even though homebuilder stocks started the year strong, a lot of the stocks pulled back in the second half of this year due to concerns over margins and mortgage rates, MKM Partners said.

Based in Red Bank, NJ, Hovnanian designs, constructs, markets, and sells residential homes in the U.S.

Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:

We rate HOVNANIAN ENTRPRS INC as a Sell with a ratings score of D+. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, poor profit margins, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Household Durables industry. The net income has significantly decreased by 92.1% when compared to the same quarter one year ago, falling from $322.46 million to $25.52 million.
  • The gross profit margin for HOVNANIAN ENTRPRS INC is rather low; currently it is at 18.34%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 3.68% trails that of the industry average.
  • Net operating cash flow has significantly decreased to $12.15 million or 82.38% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 52.24%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 91.79% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • HOVNANIAN ENTRPRS INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, HOVNANIAN ENTRPRS INC swung to a loss, reporting -$0.12 versus $1.84 in the prior year. This year, the market expects an improvement in earnings ($0.21 versus -$0.12).
  • You can view the full analysis from the report here: HOV