Hovnanian (NYSE: HOV) soared nearly 30% following the company's very strong Q4 results in which it topped on the top line, bottom line, margins, and in terms of better than expected outlook. Overall, Hovnanian shares are now up more than 300% on a YTD basis but are off by about 10% from last year's highs of $146.
Inside the Numbers
In Q4, the company reported $7.41 in earnings per share which was a 33% improvement from last year's $5.54 per share in earnings. Revenues came in at $814.3 million for the quarter and revenue was $2.8 billion for the full year. These figures were 19% and 18% higher than last year. Overall, the company had $607 million in net income which is certainly impressive given its total market cap of $847 million.
The company's gross margin increased by 200 basis points to 19.4% for the quarter. And, it was up 390 basis points to 18.6% for the year. This trend is certainly encouraging and shows that despite the inflationary environment, Hovnanian is doing just fine as its customers are willing to absorb higher prices. This is likely an indication of low inventories and strong demand in housing.
Another positive sign is that its backlog grew 15.4% to $1.6 billion. Its total community count also increased to 140, a 17% gain from last year. In the earnings release, the company commented, "Operating results for the fourth quarter exceeded the upper end of our original guidance for adjusted gross margin, adjusted pretax income and adjusted EBITDA. Given the solid level of sales per community, an increase in our community count and higher gross margin on current sales and homes in backlog, we are anticipating significant growth in profitability in fiscal 2022 beginning with a strong first quarter."
In terms of its outlook for the next quarter, it sees revenues between $640 million and $670 million, gross margins between 20.5% and 22%, and pretax income between $30 million and $35 million. For the full year, it sees revenues between $2.8 billion and $3 billion, gross margins between 23.5% and 25.5%, and pretax income between $260 million and $310 million.
These figures would mean the stock would continue to be very attractive especially as the housing market is likely going to benefit from long-term rates dropping in addition to rising wages and a tight labor market.