Image Source: Hovnanian Enterprises.

What happened

Shares of home builder Hovnanian Enterprises (NYSE:HOV) slumped on Friday following the company's fiscal third-quarter report. The company missed analyst estimates for both revenue and earnings, leading investors to push the stock down 13% by 10:45 a.m. EDT.

So what

Hovnanian reported third-quarter revenue of $716.9 million, up 32.6% year over year, but $15 million below the average analyst estimate. Consolidated delivered homes totaled 1,574 during the quarter, up 11.8% year over year. The number of deliveries increased in the Northeast, Southwest, and West, while decreasing in the mid-Atlantic, Midwest, and Southeast regions.

Hovnanian posted a net loss of $0.5 million during the quarter, roughly break-even on a per-share basis, up from a loss of $0.05 per share during the prior-year period. Analysts were expecting a profit of $0.06 per share. Write-offs related to inventory impairment and land options reduced pre-tax income by $1.56 million during the third quarter and by $22.9 million during the first nine months of the fiscal year.

Hovnanian expects to produce between $2.7 billion and $2.9 billion of revenue for the full fiscal year, with adjusted EBITDA between $200 million and $250 million and pre-tax profit excluding one-time charges between $25 million and $35 million.

Now what

CEO Ara Hovnanian recognizes that the company's performance needs to improve:

"However, we are fully aware that there is even more work to do in order to return the company to higher levels of sustainable profits. We are anticipating a solid fourth quarter with income before income taxes, excluding land related charges, gains or losses on extinguishment of debt and other non-recurring items such as legal settlements, expected to be between $32 million and $42 million."

With Hovnanian coming up short of expectations, investors punished the stock.

Timothy Green has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.