Hovnanian Enterprises Inc. shares slumped 6% in early trade Tuesday, after the company reported weaker-than-expected profit and revenue for its second fiscal quarter and said it is likely to post a loss for the full fiscal year. The homebuilder said it had a net loss of $19.6 million, or 13 cents a share, in the quarter, after a loss of $7.9 million, or 5 cents a share, in the year-earlier period. Revenue rose 4.2% to $468.9 million. The FactSet consensus was for a loss of 6 cents a share and revenue of $535 million. The company had disclosed on its first-quarter call that it expected gross margin to be hurt by incentives and concessions on unsold homes. "However, the impact was greater than we anticipated and we are disappointed with our second quarter results," Chief Executive Ara K. Hovnanian said in a statement. "Based on the higher gross margin in our April 30(th) backlog we are confident that our gross margin for the third and fourth quarters of fiscal 2015 will show sequential increases. While we still feel good about our ability to grow the top line during fiscal 2015 and still expect to generate a solid profit during the fourth quarter, we do not expect it to be sufficient to offset earlier quarterly losses." Shares are down 29% in the year so far, while the S&P 500 has gained 1%.
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