U.S. homebuilder Hovnanian Enterprises reported yesterday that it swung to a Q1 loss of $57.3 million (-$0.91/share) versus a profit of $81.43 million ($1.25/share) a year ago, its second quarterly loss in a row after nine years of gains. The result is worse than analyst expectations of a $0.65 EPS loss. Hovnanian warned last week that it would post a Q1 loss and one-time write-offs related to Florida cancellations, as well as $8 million in write-offs in other markets. The Florida write-offs came in at $93 million. Q1 revenue was $1.17 billion, down 8.8% from $1.28 billion in the year-ago period. Without the write-offs, Hovnanian would have earned EPS of $0.20. The company is forecasting a net loss in Q2 of -$0.05-0.20 per share. Florida homebuyers canceled 36% of their contracts with Hovnanian in the quarter; elsewhere in the country, the company's cancellation rate was 29%. “Most of our markets have begun to show signs of stabilization," said president and CEO Ara K. Hovnanian, "but we are not yet confident that we have found the bottom of this housing slowdown...Once the housing market bottoms out, we are not expecting a rapid recovery.”
Sources: New York Times, Bloomberg, Newsday
Commentary: Hovnanian Enterprises: One to Hold For the Housing Sector Rebound • Hovnanian Enterprises Suffers Gruesome Fourth Quarter • Wachovia: Homebuilder Sales Trends Erratic
Stocks/ETFs to watch: Hovnanian Enterprises Inc. (HOV). Competitors: DR Horton Inc. (DHI), Lennar Corp. (LEN), Pulte Homes Inc. (PHM). ETFs: Rydex S&P Midcap 400 Pure Growth (RFG), streetTRACKS SPDR Homebuilders ETF (XHB), iShares Lehman 1-3 Year Treasury Bond Fund (SHY)
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