Hovnanian Enterprises (HOV) AI Stock Analysis

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Hovnanian Enterprises

(NYSE:HOV)

Rating:74Outperform

Price Target:

$120.00

▲(12.00%Upside)

Hovnanian Enterprises' strong financial performance, characterized by significant revenue growth and profitability, is the primary driver of its overall score. The undervaluation based on P/E ratio suggests growth potential, although technical indicators reflect mixed signals. Earnings call insights highlight both strengths and challenges, but are not considered in the final weighted score calculation.

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

Market Cap

$605.80M

Dividend YieldN/A

Average Volume (3M)230.36K

Price to Earnings (P/E)3.8

Beta (1Y)1.88

Revenue Growth7.93%

EPS Growth-3.59%

CountryUS

Employees1,878

SectorConsumer Cyclical

Sector Strength69

IndustryResidential Construction

Share Statistics

EPS (TTM)2.43

Shares Outstanding5,068,858

10 Day Avg. Volume212,132

30 Day Avg. Volume230,364

Financial Highlights & Ratios

PEG Ratio-0.24

Price to Book (P/B)0.85

Price to Sales (P/S)0.00

P/FCF Ratio-22.24

Enterprise Value/Market Cap0.89

Enterprise Value/Revenue0.04

Enterprise Value/Gross Profit0.95

Enterprise Value/Ebitda0.41

Forecast

1Y Price Target

$120.00

Price Target Upside12.00% 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: -2.47%|

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 demonstrates strong financial performance with significant revenue growth, profitability, and efficient cash management. The elimination of debt and solid equity growth highlight significant improvements in financial health. However, maintaining operational efficiency and cash flow management remains essential for sustaining growth.

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.

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

Hovnanian Enterprises Technical Analysis

Technical Analysis Sentiment

Negative

Last Price107.14

Price Trends

50DMA

102.68

Positive

100DMA

102.02

Positive

200DMA

131.05

Negative

Market Momentum

MACD

2.91

Positive

RSI

49.35

Neutral

STOCH

17.12

Positive

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 107.14 is below the 20-day moving average (MA) of 109.78, above the 50-day MA of 102.68, and below the 200-day MA of 131.05, indicating a neutral trend. The MACD of 2.91 indicates Positive momentum. The RSI at 49.35 is Neutral, neither overbought nor oversold. The STOCH value of 17.12 is Positive, 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 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
TPH	80 Outperform	$2.99B	7.35	13.28%	―	10.82%	19.34%
MHO	76 Outperform	$3.06B	6.03	19.02%	―	8.68%	8.39%
HOV	74 Outperform	$605.80M	3.79	28.55%	―	7.93%	-3.59%
CCS	73 Outperform	$1.80B	6.11	12.36%	1.96%	10.75%	8.31%
BZH	71 Outperform	$705.46M	7.52	7.97%	―	13.50%	-40.36%
Sector *	62 Neutral	$16.98B	10.86	-7.08%	3.05%	1.73%	-25.18%
LGIH	62 Neutral	$1.19B	6.55	9.36%	―	-4.37%	-3.17%

* Consumer Cyclical Sector Average

Performance Comparison

HOV

Hovnanian Enterprises

107.14

-83.55

-43.81%

BZH

Beazer Homes

23.28

-8.97

-27.81%

MHO

M/I Homes

114.10

-37.74

-24.86%

TPH

Tri Pointe

32.99

-12.63

-27.69%

LGIH

LGI Homes

50.79

-53.07

-51.10%

CCS

Century Communities

59.07

-37.74

-38.98%

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: Jul 19, 2025