Is Howard Hughes Stock a Buy in 2021?

HHC has added roughly 123% since the market crash last March

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The Howard Hughes Corp (NYSE:HHC) is an American real estate development and management company based in Texas. The company owns, manages, and develops commercial, residential, and mixed-use real estate throughout the U.S. Howard Hughes' assets include operating and development opportunities in Seaport District NYC; Downtown Columbia, Maryland; The Woodlands, The Woodlands Hills, and Bridgeland in the Greater Houston area; Summerlin, Las Vegas; and Ward Village in Honolulu, Hawaii.

HHC stock price has experienced nearly 37% decline over the past year. Nonetheless, Howard Hughes stock has recovered 123% since its 52-week low of $35.10 on March 23. HHC stock price is still down significantly from its annual high of $129.74, however. Today, HHC is up 0.8% to trade at $78.17. 

Despite the negative price action on HHC, the company has itself has performed fairly well in terms of quarterly financial reports. Company fundamentals are not quite lining up with the stock performance right now, a major flag that investors should investigate HHC further.

Out of the four reports released in 2020, Howard Hughes reported three earnings beats. For the fourth quarter of 2019, the company beat expectations by a margin of $0.37 and reported an earnings per share (EPS) of -$0.03.  For the first quarter of 2020, HHC dropped its reported EPS down to -$2.88 and also missed analyst earnings expectations by a huge margin of $2.71. HHC demonstrated an increase in earnings for the second quarter of 2020 and reported an EPS of -$0.61, beating expectations by a good margin of $0.81. For its most recent quarter, Howard Hughes boosted its earnings back into positive territory at $2.51 per share, beating expectation by a wide margin of $3.03. Wall Street is currently anticipating that the next earnings report on HHC will include an EPS back into negative territory.

    Howard Hughes' bottom lines and top lines were both heavily hit by the COVID-19 pandemic. Over the past 12 months the company only generated total revenue of about $770 million while absorbing a net loss of $20 million. This marked a decrease of more than $500 million in revenue in just the past year and an accumulated net loss of about $90 million. In addition, Howard Hughes' figures weren’t particularly consistent in their growth in the years leading up to 2020.

    Nonetheless, because of its relatively poor performance in 2020, the potential upside remains fairly significant for HHC stock investors. HHC is undeniably a risky stock, but the company defied all expectations and posted very promising numbers in its last earnings report of 2020. Overall, the company should reasonably be able to recover from its net losses in 2020. Moreover, Howard Hughes could be looking at some pretty big stock gains if HHC can replicate even a fraction of what it accomplished in the last reported quarter.

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