HOV 3Q Estimates In-Line With Expectations

Hovnanian Enterprises, Inc.

reported 3Q results with EPS of -$0.92 (including $0.42 of FAS 109 changes and a $0.04 gain on early release of debt) vs. JP Morgan's -$0.35 estimate. These results reflect a 37% y/y decline in orders, in line with JP Morgan's -36% estimate. Cash flow remains negative, as Hovnanian used $30M in cash for land purchases (totaling $70M) and used $19M to pay down debt, resulting in the company's cash balance falling to $509M from $575M in 2Q. More to be revealed after Hovnanian's 11am EST conference call on 9/3. JP Morgan maintains its Neutral rating for Hovnanian Enterprises, Inc., which closed yesterday at $3.68.