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Hovnanian Enterprises Inc (HOV)



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Upturn Advisory Summary
02/11/2025: HOV (2-star) is currently NOT-A-BUY. Pass it for now.
Analysis of Past Performance
Type Stock | Historic Profit 6.42% | Avg. Invested days 30 | Today’s Advisory PASS |
Upturn Star Rating ![]() ![]() | Upturn Advisory Performance ![]() | Stock Returns Performance ![]() |
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Key Highlights
Company Size Small-Cap Stock | Market Capitalization 1.04B USD | Price to earnings Ratio 5.37 | 1Y Target Price 27 |
Price to earnings Ratio 5.37 | 1Y Target Price 27 | ||
Volume (30-day avg) 69883 | Beta 2.61 | 52 Weeks Range 115.90 - 240.34 | Updated Date 02/15/2025 |
52 Weeks Range 115.90 - 240.34 | Updated Date 02/15/2025 | ||
Dividends yield (FY) - | Basic EPS (TTM) 32.05 |
Revenue by Products
Product revenue - Year on Year
Revenue by Geography
Geography revenue - Year on Year
Earnings Date
Report Date 2025-02-20 | When Before Market | Estimate - | Actual - |
Profitability
Profit Margin 8.41% | Operating Margin (TTM) 6.95% |
Management Effectiveness
Return on Assets (TTM) 7.02% | Return on Equity (TTM) 41.31% |
Valuation
Trailing PE 5.37 | Forward PE 3.62 | Enterprise Value 1694449570 | Price to Sales(TTM) 0.26 |
Enterprise Value 1694449570 | Price to Sales(TTM) 0.26 | ||
Enterprise Value to Revenue 0.56 | Enterprise Value to EBITDA 4.77 | Shares Outstanding 5325330 | Shares Floating 4730321 |
Shares Outstanding 5325330 | Shares Floating 4730321 | ||
Percent Insiders 6.2 | Percent Institutions 68.84 |
AI Summary
Comprehensive Overview of Hovnanian Enterprises Inc. (NYSE: HOV)
Company Profile:
History and Background:
Hovnanian Enterprises, Inc. (HOV) is a leading homebuilder in the United States, with a history dating back to 1959. Founded by Kevork Hovnanian, the company initially focused on affordable single-family homes in New Jersey. Over the decades, Hovnanian expanded its operations across the East Coast, Mid-Atlantic, Southeast, and Southwest regions, becoming a recognized name in the residential construction industry.
Core Business Areas:
Hovnanian operates through two primary segments:
- Homebuilding: This segment focuses on the design, construction, and sale of single-family detached homes, townhomes, and condominiums across various price points.
- Financial Services: This segment offers mortgage banking, title insurance, and homeowner's insurance services to Hovnanian homebuyers and other customers.
Leadership and Corporate Structure:
Leadership Team:
- Ara K. Hovnanian: Chairman, President, and Chief Executive Officer
- Kevork S. Hovnanian: Executive Vice President
- David J. Knapp: Chief Financial Officer
- Nicholas Polito: Senior Vice President, General Counsel, and Secretary
Corporate Structure:
Hovnanian operates as a decentralized organization with regional divisions responsible for land acquisition, development, construction, and sales within their respective territories. This structure allows for local market responsiveness and adaptation to varying customer preferences.
Top Products and Market Share:
Top Products and Offerings:
Hovnanian offers a diverse range of homes catering to various buyer segments, including:
- Entry-level homes: Affordable single-family homes and townhomes.
- Move-up homes: Larger single-family homes with more features and amenities.
- Luxury homes: High-end custom homes with premium finishes and expansive living spaces.
- Active adult communities: Age-restricted communities with amenities tailored for retirees.
Market Share:
Hovnanian's market share varies across different regions and product segments. According to available data, their national market share for single-family homes falls within the range of 1% to 2%. However, the company holds a higher market share in specific regions, like the Mid-Atlantic, where they have a stronger presence.
Competitive Comparison:
Hovnanian competes with other major homebuilders like Lennar (LEN), PulteGroup (PHM), D.R. Horton (DHI), and NVR Inc. (NVR). Compared to its competitors, Hovnanian focuses more on the entry-level and move-up market segments, offering homes at a more affordable price point. However, this strategy also means facing higher competition and lower profit margins.
Total Addressable Market:
The total addressable market for Hovnanian encompasses the entire US new home construction market. In 2023, the estimated size of this market was around 1.4 million new homes built annually. This market is expected to fluctuate based on factors like economic conditions, interest rates, and demographic trends.
Financial Performance:
Recent Financial Statements Analysis:
Revenue: Hovnanian's revenue has fluctuated in recent years, influenced by market conditions and housing starts. In 2022, the company reported revenue of $1.99 billion, representing a slight increase from the previous year.
Net Income: Net income has also shown volatility, with a reported profit of $149 million in 2022 compared to a loss of $39 million in 2021. This improvement reflects the recovering housing market and increased demand for new homes.
Profit Margins: Profit margins remain relatively slim for Hovnanian, averaging around 8% in recent years. The competitive nature of the homebuilding industry and rising costs of construction materials contribute to this margin compression.
Earnings per Share (EPS): Hovnanian's EPS has followed a similar trend as net income, reaching $1.49 in 2022 after a negative EPS of $0.39 in 2021.
Year-over-Year Financial Performance Comparison:
Comparing 2022 to 2021, Hovnanian's financial performance shows signs of improvement. Revenue and net income increased, while the company moved from a loss to a profit position. However, these improvements need to be assessed within the context of the broader market conditions and sustained over time to indicate a clear trend of recovery.
Cash Flow and Balance Sheet Health:
Hovnanian's cash flow from operations has remained positive in recent years, indicating sufficient liquidity to cover operational expenses and debt obligations. The company's balance sheet shows a moderate level of debt, which is typical for the homebuilding industry. However, managing debt effectively and maintaining a healthy cash flow will be crucial for future growth and stability.
Dividends and Shareholder Returns:
Dividend History:
Hovnanian has a history of inconsistent dividend payments, influenced by market conditions and financial performance. The company currently pays a quarterly dividend of $0.10 per share, translating to an annualized yield of around 3%.
Shareholder Returns:
Hovnanian's stock price has experienced volatility in recent years, reflecting the overall market sentiment and the company's financial performance. Over the past year, the stock has yielded a total return of approximately 10%, which includes both price appreciation and dividend income. However, over longer timeframes, like 5 and 10 years, the total returns have been negative, indicating the challenges faced by the company.
Growth Trajectory:
Historical Growth Analysis:
Hovnanian's historical growth has been inconsistent, primarily tied to the cyclical nature of the housing market. Over the past five years, the company has experienced periods of growth followed by declines, with revenue and earnings fluctuating accordingly.
Future Growth Projections:
Future growth projections for Hovnanian are mixed. Some analysts anticipate a moderate growth trajectory, driven by increasing demand for housing and potentially rising home prices. However, others remain cautious, citing concerns about rising interest rates and potential economic slowdowns that could impact the housing market.
Recent Initiatives and Growth Prospects:
Hovnanian is focusing on several initiatives to drive future growth, including:
- Expanding into new markets: The company is exploring opportunities in new geographic areas with high housing demand.
- Introducing new product lines: Hovnanian is developing new home designs and floor plans to cater to evolving buyer preferences.
- Improving operational efficiency: The company is implementing strategies to reduce costs and enhance productivity.
The success of these initiatives will play a crucial role in determining Hovnanian's future growth trajectory.
Market Dynamics:
Industry Trends:
The US housing market is currently experiencing a period of moderate growth, supported by low-interest rates and steady economic conditions. However, rising inflation and potential interest rate hikes in the future could pose challenges to the industry.
Demand-Supply Scenario:
The demand for new homes remains strong, driven by factors like population growth, household formation, and urbanization. However, supply chain disruptions and labor shortages are contributing to higher construction costs and longer
Disclaimers:
- This analysis is based on publicly available information and should not be considered financial advice.
- The information provided is for educational purposes only and does not constitute an endorsement or recommendation of any particular stock.
- Investors should conduct their own research and due diligence before making any investment decisions.
About Hovnanian Enterprises Inc
Exchange NYSE | Headquaters Matawan, NJ, United States | ||
IPO Launch date 1992-03-17 | President, CEO & Chairman of the Board Mr. Ara K. Hovnanian | ||
Sector Consumer Cyclical | Industry Residential Construction | Full time employees 1878 | Website https://www.khov.com |
Full time employees 1878 | Website https://www.khov.com |
Hovnanian Enterprises, Inc., through its subsidiaries, designs, constructs, markets, and sells 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, move-up buyers, luxury buyers, active lifestyle buyers, and empty nesters. It also provides mortgage loans and title services. Hovnanian Enterprises, Inc. was founded in 1959 and is headquartered in Matawan, New Jersey.
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