NEW YORK (TheStreet) -- Shares of Hovnanian Enterprises Inc. (HOV) are higher by 6.10% to $4 in late morning trading on Monday, as homebuilder stocks get a boost from Toll Brothers Inc.'s (TOL) preliminary fourth quarter 2014 revenue results, which showed a 29% increase to $1.35 billion over the prior year.
Toll Brothers said that its average price of homes delivered for the most recent quarter was $747,000, compared to $703,000 for the 2013 fourth quarter.
Additionally, homebuilder stocks may also be rising off of positive comments made by TheStreet's Jim Cramer on CNBC's "Squawk on the Street."
"The mortgage applications are good. The re-fis are better, but I think what's really mattered to this group is people are desperate for something that hasn't gone up. People are looking for something to hold onto, and I think the homebuilders make sense," Cramer said, CNBC.com reports.
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 a number of negative factors, 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, weak operating cash flow and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- HOV has underperformed the S&P 500 Index, declining 24.75% from its price level of one year ago. 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.
- Net operating cash flow has significantly decreased to -$73.44 million or 133.30% 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 21.54%. 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 3.10% trails the industry average.
- HOVNANIAN ENTRPRS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. However, we anticipate underperformance relative to this pattern 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 40.0% in earnings ($0.12 versus $0.20).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Household Durables industry. The net income increased by 102.0% when compared to the same quarter one year prior, rising from $8.47 million to $17.11 million.
- You can view the full analysis from the report here: HOV Ratings Report