Hovnanian stock rallies after big profit rise, raised outlook even as home demand continues to slow
Shares of Hovnanian Enterprises Inc. leapt 3.2% in afternoon trading Thursday, to bounce off the previous session's 19-month closing low, after the home builder a big jump in fiscal third-quarter profit and lifted its full-year outlook, despite signs of a slowing housing market. Net income for the quarter to July 31 rose to $79.95 million, or $10.82 a share, from $47.70 million, or $6.72 a share, in the year-ago period. Revenue grew 11.1% to $767.59 million. There were no analyst estimates compiled by FactSet. Consolidated contract dollars to $467.9 million, or 799 homes, from $609.1 million, or 1,211 homes, while the gross contract cancellation rate for consolidated contracts increased to 27% from 16%. "Beginning in May of 2022, home demand slowed and continued to slow further through the summer months," said Chief Executive Ara Hovnanian. "We believe this striking shift in homebuyers' sentiment is due to the sharp rise in mortgage rates since January, year-over-year home price increases, record high inflation levels and fears of an economic recession." For fiscal 2022, the company raised its guidance range for earnings per share to between $32.00 and $33.50 from between $26.50 and $32.00, but kept its revenue outlook at between $2.80 billion and $3.00 billion. Hovnanian's stock has tumbled 27.2% over the past three months, while the iShares U.S. Home Construction ETF has lost 7.7% and the S&P 500 has lost 4.3%.
-Tomi Kilgore
(END) Dow Jones Newswires
09-01-22 1346ET
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