Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link
NEW YORK (
) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself, unimpressive growth in net income and poor profit margins.
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Highlights from the ratings report include:
- The share price of HOVNANIAN ENTRPRS INC has not done very well: it is down 22.45% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
- 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 116.9% when compared to the same quarter one year ago, falling from -$11.31 million to -$24.52 million.
- The gross profit margin for HOVNANIAN ENTRPRS INC is rather low; currently it is at 18.56%. Regardless of HOV's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, HOV's net profit margin of -6.73% significantly underperformed when compared to the industry average.
- 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. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, HOVNANIAN ENTRPRS INC turned its bottom line around by earning $0.20 versus -$0.49 in the prior year. This year, the market expects an improvement in earnings ($0.23 versus $0.20).
- HOV's revenue growth trails the industry average of 28.1%. Since the same quarter one year prior, revenues slightly increased by 1.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
Hovnanian Enterprises, Inc. designs, constructs, markets, and sells residential homes in the United States. It constructs single-family detached homes, attached townhomes and condominiums, urban infill, and active adult homes. Hovnanian has a market cap of $615.6 million and is part of the industrial goods sector and materials & construction industry. Shares are down 30.4% year to date as of the close of trading on Thursday.
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