Howard Hughes Holdings has gotten torched over the last six months - since October 2025, its stock price has dropped 21.3% to $63.88 per share. This was partly due to its softer quarterly results and may have investors wondering how to approach the situation.
Is there a buying opportunity in Howard Hughes Holdings, or does it present a risk to your portfolio? Get the full breakdown from our expert analysts, it’s free.
Why Do We Think Howard Hughes Holdings Will Underperform?
Even with the cheaper entry price, we don't have much confidence in Howard Hughes Holdings. Here are three reasons we avoid HHH and a stock we'd rather own.
1. Long-Term Revenue Growth Disappoints
A company’s long-term sales performance is one signal of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Over the last five years, Howard Hughes Holdings grew its sales at a 21.5% annual rate. Although this growth is acceptable on an absolute basis, it fell slightly short of our standards for the consumer discretionary sector, which enjoys a number of secular tailwinds.
2. New Investments Bear Fruit as ROIC Jumps
We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Over the last few years, Howard Hughes Holdings’s ROIC averaged 1.6 percentage point increases each year. This is a good sign, and we hope the company can continue improving.
3. High Debt Levels Increase Risk
Debt is a tool that can boost company returns but presents risks if used irresponsibly. As long-term investors, we aim to avoid companies taking excessive advantage of this instrument because it could lead to insolvency.
Howard Hughes Holdings’s $5.12 billion of debt exceeds the $2.10 billion of cash on its balance sheet. Furthermore, its 6× net-debt-to-EBITDA ratio (based on its EBITDA of $491.4 million over the last 12 months) shows the company is overleveraged.
At this level of debt, incremental borrowing becomes increasingly expensive and credit agencies could downgrade the company’s rating if profitability falls. Howard Hughes Holdings could also be backed into a corner if the market turns unexpectedly – a situation we seek to avoid as investors in high-quality companies.
We hope Howard Hughes Holdings can improve its balance sheet and remain cautious until it increases its profitability or pays down its debt.
Final Judgment
We cheer for all companies serving everyday consumers, but in the case of Howard Hughes Holdings, we’ll be cheering from the sidelines. After the recent drawdown, the stock trades at $63.88 per share (or a forward price-to-sales ratio of 2.3×). The market typically values companies like Howard Hughes Holdings based on their anticipated profits for the next 12 months, but there aren’t enough published estimates to arrive at a reliable number. You should avoid this stock for now - better opportunities lie elsewhere. We’d recommend looking at our favorite semiconductor picks and shovels play.
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