Dominion Homes update

Financially, this latest quarter (reported on May 8th) has moved Dominion Homes (NASDAQ:DHOM) from profitable to unprofitable. This is no surprise given Dominion’s downward trending home sales numbers and the deteriorating US housing market but it is still a strong negative from my point of view since I only like to own profitable companies.

In their earnings press release, DHOM says it doesn’t expect 2006 to be a profitable year.

Analysts are pretty much across the board thumbs-down on the company with Hold and Sell ratings.

But as Irwin Michael says in his latest comments on DHOM, the company’s market capitalization is still only about half its book value. Sooner or later, assuming that land values and home sales don’t both totally collapse, this imbalance should correct itself one way or another.

On a positive note, the stock price has been trending slightly upward since early April. I’m in the money at this point (if I was to sell it today, I would have a small profit) and have renewed my stop loss increasing it to $8.00.


I’ve written previously about Dominion Homes here, here, here and here.