another day and another homebuilder warns...pathetic

Discussion in 'Wall St. News' started by S2007S, Nov 8, 2006.

  1. S2007S


    AND foooools still think its time to buy these stocks, how stupid could one be to think that these homebuilding stocks hold any value...come on fools, Homebuilders willl FALL even harder, expect another 25%%%%%% +++ drop in these stocks, its far from over. Every single day there is another homebuilder warning and greenspan thinks the worse is over. The worse is over, who are they kidding....

    BOSTON (MarketWatch) -- Hovnanian Enterprises Inc. said it expects to recognize impairment charges and report a fourth-quarter loss, piling more bad news on what's already been a beleaguered home-builder sector this week.
    Shares of Hovnanian lost 3.7% to change hands at $27.98 Wednesday afternoon.
    Late Tuesday, the company (HOV :

    HOV27.86, -1.18, -4.1% ) said net contracts for the fourth quarter ended Oct. 31 fell 36% from a year earlier.
    "Our financial results for the fourth quarter continued to be negatively impacted by high cancellation rates and increased use of concessions and incentives, particularly on the resale of those homes which experienced contract cancellations," said Chief Executive Ara Hovnanian in a statement.
    He echoed comments from other builder CEOs this week that they've yet to see signs of improvement in the nation's housing market.
    Chart of HOV
    The Red Bank, N.J.-based company said it expects to take about $300 million in quarterly impairment and land-option write-off charges.
    Without those charges, the company expects to deliver a profit for fiscal 2006 of between $4.85 and $5.25 a share.
    Its previous estimate was in a range of $5 to $5.75 a share. A dozen analysts polled by Thomson First Call have been forecasting, on average, a profit of $5 a share.
    Hovnanian said it expects to report a loss for the fourth quarter.
    Like other builders, Hovnanian's walking away from deposits placed on options for land as the housing market pulls back.
    "Although it is painful to incur these non-cash charges, we believe it is much better than proceeding to build out these communities at very low returns or losses over the coming years," said CEO Hovnanian.
    Cancellations represented 35% of gross contracts in the fourth quarter, up from 33% in the third quarter. Home builders have been reporting rising cancellation rates as buyer confidence erodes.
    "One reason cancellations are so high is that people think they can get the same house cheaper if they just wait a week or two," said M.D.C. Holdings Inc.
    MDC48.11, -0.90, -1.8% ) Chief Executive Larry Mizel at a home-building conference Wednesday sponsored by UBS. He said " excess inventory needs to be eaten through" before the market recovers.
    Analysts have their say
    Wall Street analysts were quick to react to Hovnanian's warning with lowered expectations.
    Stephen Kim at Citigroup slashed his full-year profit estimate to $2.24 a share, down from $5.11 previously. In fiscal 2005, Hovnanian delivered earnings of $7.16 a share.
    "Hovnanian's write-offs will likely be at the high end of the group's range, given the company's greater exposure to California and Florida," the analyst wrote in a research note. "However, it appears that write-offs at the builders may be more significant than we had previously anticipated, particularly in the fourth calendar quarter."
    He thinks the majority of Hovnanian's quarterly write-offs are attributable to San Diego, Orange County, Florida and Minneapolis, with impairments the result of land acquired in the second half of 2004 and after.
    At Banc of America Securities, analyst Daniel Oppenheim cut his fourth-quarter estimate for Hovnanian to a loss of $1.96 a share, a far cry from his prior view calling for a profit of $1.05 a share. Hovnanian's move to slow its community openings is a positive step, he said.
    "We think reduced community growth is a sound move given the oversupply in the market," Oppenheim said in a report to clients.
    Hovnanian's announcement capped off what was a tough Tuesday for the home-builder group.
    Sector bellwethers Toll Brothers Inc.
    BZH40.36, -1.71, -4.1% ) both reported weaker quarterly results and said they don't yet see anything to indicate a U.S. housing recovery. See full story.
    Yet one bright spot for the builder group Wednesday was Levitt Corp. (LEV :

    LEV12.66, +0.98, +8.4% ) . The company's shares were up 7% in afternoon dealings after the company said its quarterly earnings beat Wall Street estimates by a penny a share.
    The Fort Lauderdale, Fla., company late Tuesday said its third-quarter profit was $3 million, or 15 cents a share. Analysts surveyed by Thomson First Call had forecast net income of 14 cents a share. End of Story
  2. I hate to say but you are the fool who cannot see past the smoke & mirrors.
  3. i really hope you were trying to be funny....
    i have been in the industry for 35(and i am only 40!family business) very successful years. this is just the beginning, i have seen it before; except this one things went up even higher than previous times. anyone who is in any authority that tells you it is not coming down hard is imo very unethical.
  4. socalpt


    The interest rates which drives the housing industry is going to go down, there are curently 30% increased in bankruptcy over the same period last year. We are definitely facing the housing slow down and posibly steady as soon as
    prices drop but you won't see any housing boom any time soon.
  5. S2007S


    yea, im the fool, i have proof on other forums back in late 2005 that talked about a slowdown in homebuilders and how far they were going to fall. Im sticking with my prediction, another 25% drop from here in the next 12-18 months, things are going to get worse before they get even slightly better. ARMS resetting is just the beginning. Sit back and relax the homebuilders arent going anywhere.