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Can Hovnanian Enterprises, Inc. (HOV) Keep Building On Its Turnaround?

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On Wednesday, Hovnanian Enterprises, Inc. (NYSE:HOV) will release its latest quarterly results. With the housing market finally looking like it has hit bottom and is recovering at an accelerating pace, the entire homebuilding industry has been one of the most lucrative investment areas in the entire stock market over the past year.

For Hovnanian Enterprises, Inc. (NYSE:HOV), the gains have been especially large, given how much the company got beaten down during the housing bust and the financial crisis. Still, shareholders have gotten burned before from false starts in the housing market, so some investors are still nervous about whether the company could end up giving back some of its gains. Let’s take an early look at what’s been happening with Hovnanian over the past quarter and what we’re likely to see in its quarterly report.

Stats on Hovnanian

Analyst EPS Estimate ($0.05)
Year-Ago EPS $0.02
Revenue Estimate $408.61 million
Change From Year-Ago Revenue 19.6%
Earnings Beats in Past 4 Quarters 3

Source: Yahoo! Finance.

Hovnanian Enterprises, Inc. (NYSE:HOV)Why won’t Hovnanian make money this quarter?
In recent months, analysts have actually boosted their views on Hovnanian Enterprises, Inc. (NYSE:HOV)’s earnings somewhat, narrowing their loss estimates for the April quarter by a penny per share and raising their full-year fiscal 2013 estimates by $0.08 per share. Yet after climbing so far last year, the stock has been largely flat, with a gain of just 1% since late February.

Part of the trepidation that shareholders have felt about Hovnanian Enterprises, Inc. (NYSE:HOV) comes simply from how far the stock climbed in 2012. Even when the company announced better-than-expected results back in March and predicted that Hovnanian would earn a profit this year, investors took the opportunity to sell the stock.

Yet industry CEOs remain convinced that the recovery is for real. KB Home (NYSE:KBH)‘s Jeffrey Mezger said recently that he sees the recovery as being only in its early stages, while PulteGroup, Inc. (NYSE:PHM) CEO Richard Dugas pointed to strength on the East Coast, in the middle third of the country, and in Phoenix, with Pulte actually slowing its sales rate down in order to try to focus on the highest-margin business available. For Hovnanian Enterprises, Inc. (NYSE:HOV)’s part, CEO Ara Hovnanian pointed to year-over-year gains in every one of the past 12 months as evidence of the strength of the recovery.

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