NEW YORK (TheStreet) -- Shares of Hovnanian Enterprises Inc. are down by 1.08% to $3.67 in early afternoon trading on Tuesday, as some home building stocks slip today after the National Association of Home Builders said the U.S. home building sentiment declined for a second straight month to 55 from 57 in January. Economist polled by Reuters were expecting the NAHB/Wells Fargo index to increase last month to 58. Still, readings above 50 shows that builders are seeing market conditions as favorable, Reuters added. Exclusive Report: Jim Cramer's Best Stocks for 2015 STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more. "For the past eight months, confidence levels have held in the mid-to-upper 50s range, which is consistent with a modest, ongoing recovery, David Crowe the chief economist with NAHB told Reuters. "Solid job growth, affordable home prices and historically low mortgage rates should help unleash growing pent-up demand and keep the jousting market moving forward in the year ahead," Crowe said. Separately, TheStreet Ratings team rates HOVNANIAN ENTRPRS INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation: "We rate HOVNANIAN ENTRPRS INC (HOV) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including poor profit margins and a generally disappointing performance in the stock itself." Highlights from the analysis by TheStreet Ratings Team goes as follows: The revenue growth came in higher than the industry average of 0.7%. Since the same quarter one year prior, revenues rose by 18.0%. Growth in the company's revenue appears to have helped boost the earnings per share. The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Household Durables industry. The net income increased by 882.5% when compared to the same quarter one year prior, rising from $32.82 million to $322.46 million. HOVNANIAN ENTRPRS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, HOVNANIAN ENTRPRS INC increased its bottom line by earning $1.84 versus $0.20 in the prior year. For the next year, the market is expecting a contraction of 90.2% in earnings ($0.18 versus $1.84). HOV's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 35.48%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy. The gross profit margin for HOVNANIAN ENTRPRS INC is rather low; currently it is at 19.19%. It has decreased from the same quarter the previous year. Despite the weak results of the gross profit margin, the net profit margin of 46.17% has significantly outperformed against the industry average. You can view the full analysis from the report here: HOV Ratings Report STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.
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