NEW YORK (TheStreet) -- Shares of Hovnanian Enterprises Inc. (HOV) are higher by 6.55% to $4.23 in early afternoon trading on Monday, as home builder stocks rise due to a two point increase in home builder confidence for August.
The National Association of Home Builders gauges the industry's confidence in present and future single family home sales.
For August confidence reached 55 points, readings over the 50 mark show an optimistic outlook for sales trends, Market Watch reported.
The rise in home builder confidence was due to historically low mortgages and affordable home prices, the National Association of Home Builders told Market Watch.
Separately, TheStreet Ratings team rates HOVNANIAN ENTRPRS INC as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate HOVNANIAN ENTRPRS INC (HOV) a SELL. 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 generally disappointing historical performance in the stock itself, unimpressive growth in net income, weak operating cash flow, poor profit margins and feeble growth in its earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The share price of HOVNANIAN ENTRPRS INC has not done very well: it is down 23.51% 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 699.5% when compared to the same quarter one year ago, falling from $1.32 million to -$7.90 million.
- Net operating cash flow has significantly decreased to -$55.05 million or 153.76% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- The gross profit margin for HOVNANIAN ENTRPRS INC is rather low; currently it is at 20.44%. 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, the net profit margin of -1.75% trails 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. We feel it is likely to report a decline in earnings 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. For the next year, the market is expecting a contraction of 55.0% in earnings ($0.09 versus $0.20).
- You can view the full analysis from the report here: HOV Ratings Report
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