Hovnanian Enterprises said it's Q2 loss would come in at $0.30/share, far worse that the company's original guidance of a $0.05-0.20 per-share loss. It said it expects a $15-20 million loss on abandoning deposits on land it would not develop, which will increase its per-share loss to $0.45-0.50. The #6 U.S. homebuilder said, "The adverse publicity surrounding the subprime market has further damaged homebuyers' psychology, resulting in decreased demand and leading to continued use of sales incentives." Hovnanian delivered 3,196 homes, down from 4,555 last year. Cancellations fell from 36% to 32% q/q. Net contracts were down 21% to 3,116. Shares gained 1.1% Thursday to $24.57; they have fallen 38.2% over the past year.
Sources: Press release, MarketWatch, Bloomberg
Commentary: Holding Onto Hovnanian, With Some Trepidation • Hovnanian: Housing Slump Buy • Holding Onto Hovnanian, With Some Trepidation
Stocks/ETFs to watch: Hovnanian Enterprises Inc. (HOV). Competitors: Toll Brothers Inc. (TOL), D.R. Horton Inc. (DHI), KB Home (KBH), Beazer Homes USA Inc. (BZH), Pulte Homes Inc. (PHM). ETFs: streetTRACKS SPDR Homebuilders ETF (XHB), iShares Dow Jones US Home Construction (ITB)
Conference call transcript: Hovnanian Enterprises F1Q07 Earnings Call Transcript
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