NEW YORK (TheStreet) --Shares of Hovnanian Enterprises (HOV) are gaining by 1.31% to $2.70 in mid-morning trading on Monday, as home builder stocks get a boost from the rise in confidence for the month of June.
Data from the National Association of Home Builders/Wells Fargo showed confidence among home builders spiked by five points to 59 in June, a nine-month high, MarketWatch noted.
Economists were expecting the confidence gauge to show a reading of 55.
Readings above the 50 mark indicate that home builders are encouraged by sales trends.
Based in Red Bank New Jersey Hovnanian Enterprises designs, constructs, markets, and sells single family detached homes, attached townhomes and condominiums.
Other home builder stocks on the rise today include Lennar Corp. (LEN), up by 1.03% to $47.96, M.D.C Holdings, (MDC), higher by 2.64% to $29.50 and D.R. Horton (DHI) up by 0.82% to $26.93 this morning.
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 unimpressive growth in net income, poor profit margins, 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 147.5% when compared to the same quarter one year ago, falling from -$7.90 million to -$19.56 million.
- The gross profit margin for HOVNANIAN ENTRPRS INC is rather low; currently it is at 15.61%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -4.17% trails that of the industry average.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 38.79%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 160.00% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- 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 increased its bottom line by earning $1.84 versus $0.20 in the prior year. For the next year, the market is expecting a contraction of 99.5% in earnings ($0.01 versus $1.84).
- Despite its growing revenue, the company underperformed as compared with the industry average of 7.6%. Since the same quarter one year prior, revenues slightly increased by 4.2%. 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.
- You can view the full analysis from the report here: HOV Ratings Report