Jump to content
House Price Crash Forum
Sign in to follow this  
BuyingBear

Us Home Builders Slumping Right Now!

Recommended Posts

I wish Dr. Bubb was around to provide some technical analysis, I just hope he's having fun shorting them B)

Home builders sell off after Hovnanian results

NEW YORK (Reuters) - Shares of U.S. homebuilders fell sharply in morning trading on Thursday as investors reacted to weaker-than-expected earnings and forecast from luxury home builder Hovnanian Enterprises Inc. (HOV.N: Quote, Profile, Research). The company's comments that home prices have begun to moderate reignited concerns that the industry's fast growth may have peaked, and fanned fears that a housing "bubble" has begun to deflate.

Hovnanian after Wednesday's closing bell reported quarterly earnings that missed Wall Street's projections, and its long-range forecast also lagged Wall Street expectations.

Its shares were down 7 percent in morning trade, helping drag down the broader Dow Jones Home Construction Index by 3.7 percent. The index is down 12 percent since the beginning of August, but still up 21 percent since the start of 2005.

Among individual shares, Beazer Homes (BZH.N: Quote, Profile, Research), KB Home (KBH.N: Quote, Profile, Research) and Lennar Corp. (LEN.N: Quote, Profile, Research), each lost more than 3.5 percent, Standard Pacific (SPF.N: Quote, Profile, Research) lost 4.3 percent, and Toll Brothers (TOL.N: Quote, Profile, Research) fell 4.8 percent.

"The pace of sales price increases has moderated during the third quarter," Hovnanian's chief financial officer, Larry Sorsby, said in a statement.

Hovnanian builds upscale homes, particularly in California and the U.S. Northeast where prices have posted some of the strongest gains in the recent housing boom.

"Home prices were expected to cool down anyway, and I think the fact the homebuilders are pulled down quite drastically is because (Hovnanian is) confirming people's worst fears," said Morningstar analyst Arthur Oduma.

"When you consider the background of housing bubble talk, when it actually happens people initially are in shock and they tend to overreact," he added.

Oduma said he doesn't believe there is a housing bubble, and expects a "fizzling out" more than an outright bust.

Analyst Carl Reichardt of Wachovia Securities wrote in a research note that investors should take advantage of any stock weakness that results from Hovnanian's forecast to buy builders like Ryland Group (RYL.N: Quote, Profile, Research) and D.R. Horton (DHI.N: Quote, Profile, Research).

These companies "emphasize quick turns, are focused on the entry-level and have minimal exposure to the Northeast, where we see pricing moderating most significantly," Reichardt wrote.

Hovnanian said earnings for its fiscal third quarter ended July 31 rose 34 percent to $116.1 million, or $1.76 per share, from $86.7 million, or $1.33 per share, in the year-ago period.

Analysts' average estimate was $1.77 per share, according to Reuters Estimates.

Red Bank, New Jersey-based Hovnanian maintained its outlook for fiscal 2005 earnings of more than $7 per share, versus analysts' average estimate of $7.24.

It forecast fiscal 2006 earnings of $8.05 to $8.40 per share, below the average forecast of $8.50.

Lovely breakout!

hov.png

spf.png

TOL.png

LEN.png

BZH.png

post-2525-1126200045_thumb.jpg

post-2525-1126200260_thumb.jpg

post-2525-1126200273_thumb.jpg

post-2525-1126200291_thumb.jpg

post-2525-1126200306_thumb.jpg

Edited by BuyingBear

Share this post


Link to post
Share on other sites
I wish Dr. Bubb was around to provide some technical analysis, I just hope he's having fun shorting themĀ  B)

Lovely breakout!

Mmm! Analysts expected $1.78 earnings and they came in with $1.76 - the company also dropped their 2006 forecast from $8,50 to $8,40. Not exactly the end of the world!

Shares are up from $5 to $57 in the last 5 years.

Share this post


Link to post
Share on other sites
Mmm! Analysts expected $1.78 earnings and they came in with $1.76 - the company also dropped their 2006 forecast from $8,50 to $8,40. Not exactly the end of the world!

Doesn't sound like much does it, but if you miss or fail to exceed expectations then you're in trouble, if you can't do it this quarter there is faint chance you're able to do it in the future.

Look at eBay for instance, they hit expectations and slumped because they didn't exceed them.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.