Shawshank, VA 6/6/12 (StreetBeat) -- Hovnanian Enterprises Inc. (NYSE:HOV), the largest homebuilder in New Jersey, reported an unexpected profit for its fiscal second quarter as orders increased 52 percent amid rising U.S. demand for new houses. The shares surged.
Net income for the three months ended April 30 was $1.8 million, or 2 cents a share, compared with a loss of $72.7 million, or 69 cents, a year earlier, the Red Bank-based company said today in a statement. The average estimate of nine analysts surveyed by Bloomberg was for a loss of 32 cents a share.
Hovnanian, which reversed eight straight quarters of losses, has been buying land at distressed prices to boost margins as the housing market recovers. Purchases of new homes in the U.S. rose 3.3 percent in April from the previous month to an annual pace of 343,000, the Commerce Department said May 23.
“We still have fundamental concerns with the company, given its performance over the past several years,” Vincent Foley and Cedric Morris, analysts with Barclays Plc in New York, said in a June 4 note to clients. “However, its operations should benefit from the recent increase in homebuyer demand during the 2012 spring selling season.”
Hovnanian’s net contracts for the period jumped to 1,775 homes from 1,166 a year earlier, the company said.
The stock gained 19 percent to $2.02 at 9:40 a.m. in New York. It advanced 17 percent this year through yesterday, compared with a 21 percent gain for Bloomberg’s 13-member homebuilder index.
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