Why Hovnanian Enterprises Swung to an Unexpected Loss This Quarter

Hovnanian Enterprises is slipping Wednesday after swinging to a second-quarter loss. The builder of townhouses and condos recorded net losses of 5 cents a share, sliding into the red from profits of a penny a share last year, and missing estimates for EPS of 3 cents a share. Losses were despite a 6.4% year-over-year increase in revenue to $449.9 million, a product of a higher number of net contracts this quarter. However, as CFO Larry Sorsby explains, the dip into the red was a result of increased spending for future revenue growth, which put a dent in SG&A expenses this quarter. Investing for future growth is tempering share losses over what could have been far worse of a session.