Hovnanian Enterprises reported first‑quarter fiscal 2026 revenue of $631.95 million, a 6% decline from $673.6 million in the same period a year earlier, while earnings per share rose to $2.62, beating the consensus estimate of –$0.98 by $3.60.
Adjusted gross margin fell to 13.5% from 18.3% a year earlier, a compression largely driven by higher incentive costs and mortgage‑rate buydowns that increased the cost of sales, and by the sale of legacy inventory that lowered the average margin on delivered homes.
Revenue was supported by strong demand in the Northeast segment, but the company’s overall sales slipped as the Southeast and West segments saw weaker activity. In the immediately preceding quarter (Q4 FY2025), revenue was $817.9 million and EPS was –$0.51, underscoring a sequential decline in top‑line performance.
Management guided for Q2 FY2026 revenue of $625 million to $725 million and an adjusted gross margin of 13.0% to 14.0%, a flat sequential outlook that signals caution amid ongoing affordability headwinds and the need for continued incentive spending.
Investor reaction was muted; analysts focused on the margin compression and revenue decline despite the EPS beat, reflecting concerns about short‑term profitability and the sustainability of the land‑light strategy.
The company’s liquidity remains robust, with $471.4 million in cash and a strong balance‑sheet profile, but the margin pressure highlights a short‑term trade‑off as Hovnanian shifts toward higher‑margin to‑be‑built homes. Long‑term prospects are supported by the land‑light approach and improved capital structure, though the company must navigate elevated mortgage rates and incentive costs to maintain profitability.
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