Hovnanian Posts Fourth Loss in a Row, Meets Expectations

| About: Hovnanian Enterprises, (HOV)

Shares of luxury homebuilder Hovnanian Enterprises climbed 3.6% in AH trading after the company announced its fourth consecutive quarterly loss, but met analyst expectations. Hovnanian posted a Q3 loss after preferred dividend payments of $80.5 million (-$1.27/share) against a profit of $74.4 million ($1.15) a year ago (see earnings call transcript to be posted later). Revenue dropped 27% to $1.13 billion from $1.55 billion. Analysts polled by Reuters were expecting a loss of of $1.27 on revenue of $1.12 billion. The results reflect $108.6 million in land-impairment and write-off charges. The company's cancellation rate rose to 35% during the quarter, up from 32% in Q2. New contracts fell 24%, not including those from JVs. "Conditions in most of our markets remain challenging," said CEO Ara K. Hovnanian. "Credit tightening in the mortgage market has reduced the number of qualified home buyers, existing home inventory levels remain persistently high in many of our markets and buyer psychology has been negatively impacted by a steady stream of news related to falling housing prices, foreclosure rates, and mortgage availability. We expect the current challenging environment to persist through most of 2008."

Sources: MarketWatch, Wall Street Journal, AP, TheStreet.com
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Stocks/ETFs to watch: HOV. Competitors: DHI, LEN, PHM. ETFs: XHB, ITB

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