Jones Lang LaSalle
Hovnanian's troubled house
Wednesday, May 3, 2006
By PRASHANT GOPAL
STAFF WRITER
RED BANK – Shares of Hovnanian Enterprises Inc. plunged more than 6 percent to a 52-week low Tuesday, a day after the homebuilder said that it was cutting its earnings outlook.
The company, which made the announcement after the close of trading Monday, cited higher contract cancellations, lower net contracts, higher materials costs, increased use of incentives and a slower sales pace. Hovnanian's shares, which surged along with the housing boom from 2000 through the middle of last year, have fallen 50 percent since closing at $73.19 on July 20.
Homebuilders stocks were generally down Tuesday following a spate of disappointing news as the real estate market continues to show signs of cooling. Last week, one of the nation's largest builders, Dallas-based Centex, cut its 2007 guidance. Michigan-based Pulte, another industry giant, reported an 11 percent drop in first-quarter new home orders. On Friday, Levitt Corp. of Florida warned that it expects to post a loss for the first quarter.
"Many of them [builders] are cutting their guidance," said Arthur Oduma, a senior analyst with Morningstar. "It appears all of them are projecting much, much slower growth."
Hovnanian said its second-quarter earnings would be $1.40 to $1.50 per diluted share, compared with its previous outlook of $1.55 to $1.80.
Adding to investors' jitters, the National Association of Realtors said Tuesday that its "pending home sales" index, based on contracts signed in March, fell 6 percent compared with March 2005.
Oduma said the slowing real estate market is probably good in the long run for large builders like Hovnanian because it allows them to buy land for lower prices and to buy up small builders who might have difficulty surviving in a weakened market.
In heavy trading Tuesday, Hovnanian fell $2.39 to $36.39.
Centex shares dropped 0.5 percent Tuesday, Levitt shares were down 3.5 percent, and Pulte fell 2.3 percent.
E-mail: gopal@northjersey.com
Hovnanian's troubled house
Wednesday, May 3, 2006
By PRASHANT GOPAL
STAFF WRITER
RED BANK – Shares of Hovnanian Enterprises Inc. plunged more than 6 percent to a 52-week low Tuesday, a day after the homebuilder said that it was cutting its earnings outlook.
The company, which made the announcement after the close of trading Monday, cited higher contract cancellations, lower net contracts, higher materials costs, increased use of incentives and a slower sales pace. Hovnanian's shares, which surged along with the housing boom from 2000 through the middle of last year, have fallen 50 percent since closing at $73.19 on July 20.
Homebuilders stocks were generally down Tuesday following a spate of disappointing news as the real estate market continues to show signs of cooling. Last week, one of the nation's largest builders, Dallas-based Centex, cut its 2007 guidance. Michigan-based Pulte, another industry giant, reported an 11 percent drop in first-quarter new home orders. On Friday, Levitt Corp. of Florida warned that it expects to post a loss for the first quarter.
"Many of them [builders] are cutting their guidance," said Arthur Oduma, a senior analyst with Morningstar. "It appears all of them are projecting much, much slower growth."
Hovnanian said its second-quarter earnings would be $1.40 to $1.50 per diluted share, compared with its previous outlook of $1.55 to $1.80.
Adding to investors' jitters, the National Association of Realtors said Tuesday that its "pending home sales" index, based on contracts signed in March, fell 6 percent compared with March 2005.
Oduma said the slowing real estate market is probably good in the long run for large builders like Hovnanian because it allows them to buy land for lower prices and to buy up small builders who might have difficulty surviving in a weakened market.
In heavy trading Tuesday, Hovnanian fell $2.39 to $36.39.
Centex shares dropped 0.5 percent Tuesday, Levitt shares were down 3.5 percent, and Pulte fell 2.3 percent.
E-mail: gopal@northjersey.com
posted by Jones Lang LaSalle NJ News Blog at 9:57 AM
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