Hovnanian Enterprises (HOV) AI Stock Analysis

Compare

246 Followers

Top Page

Hovnanian Enterprises

(NYSE:HOV)

Rating:69Neutral

Price Target:

$98.00

▲(4.24%Upside)

The stock score of 69 reflects strong financial performance and attractive valuation, tempered by technical weakness and mixed earnings call results. Key strengths include debt reduction and strategic land options, while challenges lie in maintaining profitability amid increased incentives and revenue pressures.

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

Market Cap

$553.15M

Dividend YieldN/A

Average Volume (3M)65.61K

Price to Earnings (P/E)3.3

Beta (1Y)1.96

Revenue Growth7.93%

EPS Growth-3.59%

CountryUS

Employees1,878

SectorConsumer Cyclical

Sector Strength68

IndustryResidential Construction

Share Statistics

EPS (TTM)2.43

Shares Outstanding5,068,858

10 Day Avg. Volume70,250

30 Day Avg. Volume65,606

Financial Highlights & Ratios

PEG Ratio-0.21

Price to Book (P/B)0.73

Price to Sales (P/S)0.00

P/FCF Ratio-19.56

Enterprise Value/Market Cap0.85

Enterprise Value/Revenue0.04

Enterprise Value/Gross Profit0.83

Enterprise Value/Ebitda0.35

Forecast

1Y Price Target

$120.00

Price Target Upside27.65% Upside

Rating ConsensusHold

Number of Analyst Covering1

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: -14.42%|

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 shows strong financial performance with significant revenue growth and profitability metrics. The elimination of debt and robust equity growth further highlight improvements in financial health. However, maintaining balance sheet stability is crucial for long-term success.

Income Statement

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

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

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.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
3.06B	3.00B	2.76B	2.92B	2.78B	2.34B
	Gross Profit
568.45M	601.79M	580.14M	643.43M	540.80M	372.21M
	EBIT
227.93M	259.56M	276.90M	368.43M	266.05M	140.56M
	EBITDA
312.31M	355.57M	283.75M	364.39M	271.39M	143.42M
	Net Income Common Stockholders
215.19M	242.01M	205.89M	225.49M	607.82M	50.93M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
209.98M	209.98M	434.12M	326.20M	245.97M	262.49M
	Total Assets
2.61B	2.61B	2.49B	2.56B	2.32B	1.83B
	Total Debt
986.89M	986.89M	1.14B	1.29B	1.37B	1.57B
	Net Debt
776.92M	776.92M	708.91M	965.15M	1.13B	1.30B
	Total Liabilities
1.81B	1.81B	1.91B	2.18B	2.15B	2.26B
	Stockholders Equity
800.35M	800.35M	581.74M	383.04M	174.90M	-436.93M
Cash Flow		Free Cash Flow
-27.82M	5.78M	416.45M	76.87M	204.27M	289.45M
	Operating Cash Flow
-9.85M	23.64M	435.27M	89.47M	210.21M	292.83M
	Investing Cash Flow
-42.22M	-46.47M	-78.23M	-2.15M	9.00M	2.14M
	Financing Cash Flow
-59.45M	-187.93M	-261.71M	-16.52M	-217.27M	-167.77M

Hovnanian Enterprises Technical Analysis

Technical Analysis Sentiment

Negative

Last Price94.01

Price Trends

50DMA

97.95

Negative

100DMA

109.46

Negative

200DMA

145.58

Negative

Market Momentum

MACD

-2.10

Positive

RSI

46.93

Neutral

STOCH

74.87

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HOV, the sentiment is Negative. The current price of 94.01 is below the 20-day moving average (MA) of 97.95, below the 50-day MA of 97.95, and below the 200-day MA of 145.58, indicating a bearish trend. The MACD of -2.10 indicates Positive momentum. The RSI at 46.93 is Neutral, neither overbought nor oversold. The STOCH value of 74.87 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for HOV.

Hovnanian Enterprises Risk Analysis

Hovnanian Enterprises disclosed 34 risk factors in its most recent earnings report. Hovnanian Enterprises reported the most risks in the “Finance & Corporate” 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
TPH	77 Outperform	$2.76B	6.69	13.28%	―	10.82%	19.34%
MHO	74 Outperform	$2.93B	5.66	19.02%	―	8.68%	8.39%
BZH	70 Outperform	$661.83M	6.90	7.97%	―	13.50%	-40.36%
HOV	69 Neutral	$553.15M	3.33	28.55%	―	7.93%	-3.59%
CCS	65 Neutral	$1.63B	5.52	12.36%	2.06%	10.75%	8.31%
Sector *	62 Neutral	$6.83B	11.28	2.95%	3.88%	2.70%	-24.56%
LGIH	58 Neutral	$1.16B	6.31	9.36%	―	-4.37%	-3.17%

* Consumer Cyclical Sector Average

Performance Comparison

HOV

Hovnanian Enterprises

94.01

-57.39

-37.91%

BZH

Beazer Homes

21.36

-6.97

-24.60%

MHO

M/I Homes

107.05

-17.05

-13.74%

TPH

Tri Pointe

30.02

-7.45

-19.88%

LGIH

LGI Homes

48.96

-44.04

-47.35%

CCS

Century Communities

52.31

-27.83

-34.73%

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

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.