One-glance verdict
Undervalued
$192.75 our estimate vs market $117.02
Wall Street consensus: $74.00 (-61.6% lower than our fair-value estimate)
39% below our estimate, below the bear case
Fundamentals snapshot
Hovnanian Enterprises, Inc.
HOV · NYQ · Consumer Cyclical · Residential Construction
Current price
$117.02
52-week range
$91.52 - $162.06
Market cap
$697.40M
Balance sheet
Stretched
2.00x Concerning
Net debt $827.52M. Interest coverage shows how many times profit covers the interest bill.
What stands out
2 Rewards
3 Risks
2 rewards · 3 risks
- Reward Returns 2.1% on equity, ahead of 16% of its peers.
- Reward Free cash flow was positive in 8/10 years.
- Risk Stock trades 1651.6% above its 5-year average P/E.
- Risk Operating margin compressed from 11.9% to 0.8% over 3 years.
What this company does
Hovnanian Enterprises, Inc.
Hovnanian Enterprises is a home construction company that builds and sells various types of houses across the U.S., from starter homes to retirement communities. Its primary revenue stream (the main way it makes money) comes from the sale of these properties, which means its success is tied to the overall health of the housing market. The company also earns additional money by providing services like home loans and title insurance to its customers.
How the company got here
Hovnanian Enterprises was started in 1959 by Kevork Hovnanian, an Armenian immigrant from Iraq, and his three brothers in New Jersey. They began by building and selling affordable townhouses and condos, often to first-time homebuyers. The company grew over the decades by expanding to new states and acquiring other local and regional homebuilders. It became a publicly traded company in 1983, which allowed it to raise money from investors to fuel its growth. Today, the company is one of the larger homebuilders in the United States, though still smaller than the very largest in the industry.
What it actually does
Hovnanian Enterprises is a homebuilding company that designs, constructs, and sells a variety of residential homes. You might see their homes marketed under the brand name K. Hovnanian Homes. They build different types of homes for a wide range of customers, from people buying their first house to those looking for a luxury property or a home in a community for adults 55 and over. In addition to building and selling homes, the company also helps buyers with financing by providing mortgage loans and title services, which are needed to legally transfer ownership of a property.
Homebuilding
This is the company's main business and where it makes the vast majority of its money. Hovnanian builds and sells a variety of homes, including single-family houses, townhomes, and condominiums. They cater to different types of buyers, such as first-timers, families looking to 'move-up' to a larger home, and 'empty nesters' who may be downsizing. A special focus for the company is its 'active lifestyle' communities for older adults, which are branded as K. Hovnanian's Four Seasons and often include amenities like clubhouses and swimming pools.
Financial Services
This is a smaller but important part of the company that supports the main homebuilding business. When a customer buys a Hovnanian home, this division can help them get a mortgage (a loan to buy a house) and provide title services (which ensures the legal ownership of the property is clear). This makes the homebuying process smoother for customers and creates an additional stream of income for the company. The money earned here comes from fees and interest on the mortgage loans they provide.
What management is betting on now
The company's leadership is currently focused on a few key areas to navigate the changing housing market. They are working to increase their number of new communities, as this is a primary indicator of future home sales. Management is also concentrating on selling homes in more desirable locations and focusing on move-up buyers and active adult communities, which tend to have higher profit margins (the amount of profit made on each sale). Another major priority is carefully managing its finances and debt to ensure the company remains financially healthy, especially when interest rates for home loans are high.
Price history
How the share price has moved
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Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2024 Q4
$111.40M
FY2025 Q1
$-59.56M
FY2025 Q2
$15.98M
FY2025 Q3
$45.77M
FY2025 Q4
$163.99M
FY2026 Q1
$132.12M
FY2026 Q2
$-70.45M
FY2026 Q3
$-27.87M
Revenue
$705.75M
Net income
$-1.80M
Diluted EPS
-0.70
Operating cash flow
$-24.03M
Free cash flow
$-27.87M
Fetching…
Sources
Revenue
$667.64M
Net income
$-284.00K
Diluted EPS
-0.46
Operating cash flow
$-67.10M
Free cash flow
$-70.45M
Fetching…
Sources
Revenue
$631.95M
Net income
—
Diluted EPS
2.62
Operating cash flow
$140.89M
Free cash flow
$132.12M
Fetching…
Sources
Revenue
$817.90M
Net income
—
Diluted EPS
-0.57
Operating cash flow
$169.07M
Free cash flow
$163.99M
Fetching…
Sources
Revenue
$800.58M
Net income
$16.61M
Diluted EPS
1.99
Operating cash flow
$52.78M
Free cash flow
$45.77M
Fetching…
Sources
Revenue
$686.47M
Net income
$19.73M
Diluted EPS
2.43
Operating cash flow
$22.30M
Free cash flow
$15.98M
Fetching…
Sources
Revenue
$673.62M
Net income
—
Diluted EPS
3.58
Operating cash flow
$-55.88M
Free cash flow
$-59.56M
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Sources
Revenue
$979.64M
Net income
—
Diluted EPS
12.47
Operating cash flow
$115.82M
Free cash flow
$111.40M
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Sources
Is it cheap or expensive?
Fair value $192.75 vs current price $117.02
Wall Street consensus is the average analyst price target: $74.00 (-61.6% lower than our fair-value estimate).
Our most-likely fair value is $192.75 a share — about 64.7% above today's price of $117.02, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Stretched
Net debt $827.5M. Interest coverage 2.0x.
Net debt
$827.52M
Interest coverage
2.00x
Hovnanian Enterprises, Inc.'s profit covers its interest bill about 2.0 times over. which is weaker than most peers shown here.
Stretched
Worse cushion
Baseline
Better cushion
HOV
BASELINE
Hovnanian Enterprises, Inc.
Total debt $1.08B Interest coverage 2.00x This is the baseline the peer rows are being compared against.
Total debt $1.82B Interest coverage 8,423.56x +421,369% vs HOV Carries about 4214.7x more debt cushion than HOV.
What you should know
The case for and against HOV
2 Rewards
3 Risks
Rewards
-
Returns 2.1% on equity, ahead of 16% of its peers.
-
Free cash flow was positive in 8/10 years.
Risks
-
Stock trades 1651.6% above its 5-year average P/E.
-
Operating margin compressed from 11.9% to 0.8% over 3 years.
-
Insider ownership is only 10.2% (peer median: 12.6%).
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
112.51x
Forward P/E
9.12x
P/B
0.99x
P/S
0.25x
EV/EBITDA
22.38x
PEG ratio
2.00x
Profitability
How much profit each dollar creates
Gross margin
14.6%
Operating margin
0.8%
Net margin
0.6%
ROE
2.1%
ROA
1.3%
Health
Liquidity and balance-sheet strength
Debt / equity
1.31x
Current ratio
4.17x
Quick ratio
0.54x
Total debt
$1.08B
Total cash
$249.09M
Growth
How the business has been compounding
Revenue TTM
$2.82B
Revenue 5Y CAGR
1.7%
EPS TTM
1.04
EPS 5Y CAGR
-36.5%
Cash flow
How much cash the business throws off
Operating CF TTM
$218.84M
Free CF TTM
$166.18M
FCF margin
5.9%
Dividend
Shareholder payout
Yield
—
Payout ratio
0.0%
Last ex-div date
—