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Hovnanian Enterprises Inc (HOV)
NYSE:HOV

Hovnanian Enterprises (HOV) AI Stock Analysis

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Hovnanian Enterprises

(NYSE:HOV)

Rating:80Outperform
Price Target:
$119.00
▲(11.19%Upside)
Hovnanian Enterprises' strong financial performance and attractive valuation are significant positives, indicating financial health and potential undervaluation. Technical analysis presents a neutral outlook, while the earnings call highlights both strategic strengths and operational challenges. The lack of corporate events does not impact the overall score.

Hovnanian Enterprises (HOV) vs. SPDR S&P 500 ETF (SPY)

Hovnanian Enterprises Business Overview & Revenue Model

Company DescriptionHovnanian Enterprises, Inc. engages in the design, construction, marketing, and sale of residential homes in the United States. It offers single-family detached homes, attached townhomes and condominiums, urban infill, and active lifestyle homes with amenities, such as clubhouses, swimming pools, tennis courts, tot lots, and open areas. The company markets and builds homes for first-time buyers, first-time and second-time move-up buyers, luxury buyers, active lifestyle buyers, and empty nesters. It also provides mortgage loans and title insurance services. The company was founded in 1959 and is headquartered in Matawan, New Jersey.
How the Company Makes MoneyHovnanian Enterprises generates revenue primarily through the sale of residential homes. The company's key revenue streams include the development and sale of single-family homes, townhomes, and condominiums. Hovnanian Enterprises also earns income from land sales and the provision of mortgage financing services through its subsidiaries. The company's earnings are influenced by several factors, including housing market conditions, land acquisition strategies, construction costs, and interest rates. Strategic partnerships and joint ventures are also essential to expanding its market presence and optimizing its product offerings.

Hovnanian Enterprises Earnings Call Summary

Earnings Call Date:May 20, 2025
(Q2-2025)
|
% Change Since: -2.58%|
Next Earnings Date:Sep 04, 2025
Earnings Call Sentiment Neutral
The earnings call presented a balanced view of the company's performance with several key strengths, such as high ROE and strategic land management, but also notable challenges, including lower-than-expected revenue and gross margin, and increased incentives affecting profitability.
Q2-2025 Updates
Positive Updates
Adjusted EBITDA Exceeds Guidance
Adjusted EBITDA was $61 million for the quarter, slightly above the high end of the guidance range.
Strong Performance in Select Markets
Price increases were achieved in 31% of communities with better results in Delaware, Maryland, New Jersey, North Carolina, Virginia, and West Virginia.
High ROE and ROI Metrics
Return on equity was 27% over the last 12 months and adjusted EBIT return on investment was 26.1%, among the highest in the industry.
Significant Land Controlled via Options
85% of lots controlled through options, the highest percentage ever, showing a strategic focus on land light strategy.
Successful Debt Reduction
Paid off $27 million of 13.5% notes early, reducing the highest cost debt scheduled to mature in February 2026.
Negative Updates
Revenue and Gross Margin Below Expectations
Revenues were $686 million, near the low end of guidance, and adjusted gross margin was 17.3%, below the low end of the guidance range.
Increased Incentives Impacting Margins
Incentives increased 80 basis points sequentially to 10.5%, significantly impacting gross margins.
Year-over-Year Decline in Revenues
Total revenues were down year-over-year despite flat deliveries, primarily due to lower average sales prices.
Challenges with Older Land Vintages
Land from 2022 and some from 2021 (particularly on the West Coast) is margin challenged, impacting overall profitability.
Fluctuating Sales Pace
Contracts for the second quarter, including domestic unconsolidated joint ventures, decreased 7% year-over-year.
Company Guidance
During the fiscal 2025 second quarter earnings call, Hovnanian Enterprises provided guidance on several key metrics, comparing actual results to expectations. The company's revenues for the quarter were $686 million, at the lower end of their guidance range due to a mix of deliveries and some higher-priced homes being postponed. The adjusted gross margin was 17.3%, slightly below the guidance range, largely because incentives rose to 10.5% from 9.7% in the first quarter. The SG&A ratio was 11.7%, aligning with their guidance midpoint. Income from unconsolidated joint ventures was $9 million, at the high end of the forecast. Adjusted EBITDA exceeded expectations at $61 million, and adjusted pretax income was $29 million, near the high end of the guidance. Despite the challenging economic environment, the company was satisfied with these results and provided third-quarter guidance, anticipating revenues between $750 million and $850 million, with adjusted gross margins expected to range from 17% to 18%.

Hovnanian Enterprises Financial Statement Overview

Summary
Hovnanian Enterprises exhibits strong financial performance marked by robust revenue growth and profitability. The elimination of debt and significant equity growth further underline its financial health. However, maintaining leverage balance is crucial for long-term stability.
Income Statement
85
Very Positive
Hovnanian Enterprises shows strong financial performance with significant revenue growth over the trailing-twelve-months (TTM) compared to previous years. The gross profit margin stands at 37.02%, and the net profit margin at 7.99% for TTM, indicating efficient cost management and profitability. The EBIT and EBITDA margins are robust at 27.15% and 29.01% respectively, demonstrating healthy operating efficiency. The revenue growth rate is impressive at 10.97% from 2023 to 2024, highlighting a positive growth trajectory.
Balance Sheet
78
Positive
Hovnanian's balance sheet reflects a solid equity position with a total debt elimination in TTM, a significant improvement from previous years. The equity ratio is 32.03% in TTM, showing a stable financial structure. The return on equity (ROE) is strong at 30.35%, indicating effective utilization of equity to generate profits. However, there is a need to maintain this leverage balance to ensure long-term financial stability.
Cash Flow
80
Positive
The company's cash flow performance reveals a strong free cash flow position, with a substantial free cash flow growth rate of 606.48% from 2023 to 2024. The operating cash flow to net income ratio is 0.23, and the free cash flow to net income ratio is 0.17 for TTM, suggesting adequate cash generation relative to net income. The cash flow stability adds to the company's financial resilience despite fluctuations in operating cash flow.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue3.06B3.00B2.76B2.92B2.78B2.34B
Gross Profit568.45M601.79M580.14M643.43M540.80M372.21M
EBITDA312.31M355.57M283.75M364.39M271.39M143.42M
Net Income215.19M242.01M205.89M225.49M607.82M50.93M
Balance Sheet
Total Assets2.55B2.61B2.49B2.56B2.32B1.83B
Cash, Cash Equivalents and Short-Term Investments0.00209.98M434.12M326.20M245.97M262.49M
Total Debt0.00986.89M1.14B1.29B1.37B1.57B
Total Liabilities1.73B1.81B1.91B2.18B2.15B2.26B
Stockholders Equity820.37M800.35M581.74M383.04M174.90M-436.93M
Cash Flow
Free Cash Flow-27.82M5.78M416.45M76.87M204.27M289.45M
Operating Cash Flow-9.85M23.64M435.27M89.47M210.21M292.83M
Investing Cash Flow-42.22M-46.47M-78.23M-2.15M9.00M2.14M
Financing Cash Flow-59.45M-187.93M-261.71M-16.52M-217.27M-167.77M

Hovnanian Enterprises Technical Analysis

Technical Analysis Sentiment
Positive
Last Price107.02
Price Trends
50DMA
98.25
Positive
100DMA
104.22
Positive
200DMA
137.86
Negative
Market Momentum
MACD
1.51
Negative
RSI
58.60
Neutral
STOCH
72.91
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HOV, the sentiment is Positive. The current price of 107.02 is above the 20-day moving average (MA) of 97.36, above the 50-day MA of 98.25, and below the 200-day MA of 137.86, indicating a neutral trend. The MACD of 1.51 indicates Negative momentum. The RSI at 58.60 is Neutral, neither overbought nor oversold. The STOCH value of 72.91 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for HOV.

Hovnanian Enterprises Risk Analysis

Hovnanian Enterprises disclosed 2 risk factors in its most recent earnings report. Hovnanian Enterprises reported the most risks in the "Legal & Regulatory" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Hovnanian Enterprises Peers Comparison

Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
TPTPH
80
Outperform
$2.90B7.1213.28%10.82%19.34%
HOHOV
80
Outperform
$605.19M3.7928.55%7.93%-3.59%
MHMHO
77
Outperform
$3.02B5.9619.02%8.68%8.39%
CCCCS
68
Neutral
$1.71B5.8012.36%2.09%10.75%8.31%
BZBZH
67
Neutral
$684.86M7.307.97%13.50%-40.36%
63
Neutral
$1.21B6.659.36%-4.37%-3.17%
62
Neutral
$16.72B10.85-7.48%3.11%1.66%-24.52%
* Consumer Cyclical Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
HOV
Hovnanian Enterprises
107.02
-31.70
-22.85%
BZH
Beazer Homes
22.60
-4.08
-15.29%
MHO
M/I Homes
112.74
-4.96
-4.21%
TPH
Tri Pointe
31.96
-4.44
-12.20%
LGIH
LGI Homes
51.56
-37.25
-41.94%
CCS
Century Communities
56.08
-21.95
-28.13%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jun 24, 2025