Download PDF

1. Company Snapshot

1.a. Company Description

Hovnanian 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.

Show Full description

1.b. Last Insights on HOV

Here is a 90-word analysis of the negative drivers behind Hovnanian Enterprises' recent stock performance: Despite strong Q4 growth, Hovnanian's Q1 earnings were pressured by rising incentives, which led to a decline in margins. The company's backlog also decreased amid shifting market dynamics. Additionally, high-interest rates pose short-term risks, which could impact housing demand. While the company's strategic focus on contracts and land expansion has driven growth, these headwinds may continue to weigh on its performance.

1.c. Company Highlights

2. Hovnanian Enterprises' Q4 Earnings: A Mixed Bag

Hovnanian Enterprises, Inc. reported its fiscal 2025 fourth-quarter earnings, with revenues of $818 million, adjusted gross margin of 16.3%, and adjusted pretax income of $49 million. The company's EPS came out at $5.96, significantly higher than the estimated $0.63. The adjusted EBITDA was $89 million, and SG&A was 11.2% of revenues. The results met or exceeded the company's guidance, with income from unconsolidated joint ventures contributing $13 million.

Publication Date: 08:51

📋 Highlights
  • Q4 Revenue and Margin Performance: Achieved $818M in revenue, adjusted gross margin of 16.3%, and adjusted EBITDA of $89M, meeting/exceeding guidance despite 17% YoY revenue decline.
  • Margin Pressure from Incentives: Adjusted gross margin fell due to 12.2% of average sales price allocated to affordability incentives, a key factor in the 13% delivery reduction.
  • Strong Liquidity and Debt Reduction: Closed with $4B in liquidity and a 44.2% net debt-to-capital ratio, reflecting $1.3B equity growth and $754M debt reduction over recent years.
  • Land Position and Inventory Management: Maintains 35,883 controlled lots (6.5-year supply), with 85% under option, and reduced QMI homes by 22% to 907 units by October 2025.
  • 2026 Margin Recovery Outlook: Expects gross margins to bottom in Q1 2026 (13-14%) and improve, supported by cost discipline and reduced reliance on mortgage rate buydowns over time.

Revenue Decline and Margin Pressure

The total revenues declined by 17% year-over-year, primarily due to a 13% reduction in deliveries and the absence of a significant land sale. The adjusted gross margin decreased, mainly driven by higher incentives offered to support affordability, which accounted for 12.2% of the average sales price. The company used mortgage rate incentives to support sales, with contracts declining by 8% compared to the previous year.

Operational Performance and Land Acquisition

The company had 6.5 quick move-in homes (QMIs) per community, and the number of QMIs decreased by 22% to 907 at the end of October 2025. Hovnanian ended the quarter with 156 communities open for sale and 35,883 controlled lots, equivalent to a 6.5-year supply. The company spent $199 million on land and land development during the quarter, with 85% of lots controlled via options, up from 46% in fiscal 2015.

Balance Sheet and Liquidity

The company finished the quarter with $4 billion in liquidity, well above its targeted range, and a net debt-to-capital ratio of 44.2%. Equity has grown by $1.3 billion, and debt has been reduced by $754 million over the past few years. The recent refinancing has decreased the cost of debt, with all debt, except for the revolving credit facility, being unsecured.

Outlook and Valuation

The company expects its gross margin percentage to bottom in the first quarter of fiscal 2026 and gradually improve in the following quarters. For the first quarter, total revenues are expected to be between $550 million and $650 million, with an adjusted gross margin of 13% to 14%. Analysts estimate next year's revenue growth at 6.7%. With a P/E Ratio of 10.5 and an ROE of 7.75%, the company's valuation appears reasonable. Additionally, the Free Cash Flow Yield is 21.35%, indicating a potentially attractive return for investors.

3. NewsRoom

Card image cap

Hovnanian Enterprises: The House Fell Down

Dec -05

Source: seekingalpha.com

Card image cap

Hovnanian Enterprises Swings to Loss as Hesitant Homebuyers Squeeze Margins

Dec -04

Source: wsj.com

Card image cap

Hovnanian Enterprises, Inc. (HOV) Q4 2025 Earnings Call Transcript

Dec -04

Source: seekingalpha.com

Card image cap

Hovnanian (HOV) Surpasses Q4 Earnings and Revenue Estimates

Dec -04

Source: zacks.com

Card image cap

Hovnanian Enterprises Logs Loss on Higher Costs, Tighter Margins

Dec -04

Source: wsj.com

Card image cap

Hovnanian Enterprises Reports Fourth Quarter and Fiscal Year 2025 Results

Dec -04

Source: globenewswire.com

Card image cap

Reviewing OFA Group (NASDAQ:OFAL) & Hovnanian Enterprises (NYSE:HOV)

Dec -01

Source: defenseworld.net

Card image cap

Hovnanian Enterprises Announces Fiscal Year 2025 Earnings Release and Conference Call

Nov -20

Source: globenewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.71%)

6. Segments

Homebuilding

Expected Growth: 4.65%

Hovnanian Enterprises, Inc.'s 4.65% growth in Homebuilding is driven by increasing demand for new homes, fueled by low interest rates and a strong job market. Additionally, the company's focus on affordable pricing, strategic land acquisition, and cost-saving initiatives have contributed to its growth. Furthermore, the company's expansion into new markets and diversification of product offerings have also supported its growth momentum.

Financial Services

Expected Growth: 7.4%

Hovnanian Enterprises, Inc.'s 7.4% growth in Financial Services is driven by increasing demand for mortgage banking services, expansion of financial product offerings, and strategic partnerships. Additionally, the company's focus on digital transformation and process efficiencies has improved operational scalability, contributing to the segment's growth.

Corporate and Unallocated

Expected Growth: 4.83%

Hovnanian Enterprises, Inc.'s Corporate and Unallocated segment growth of 4.83% is driven by effective cost management, improved operational efficiencies, and strategic investments in technology. Additionally, the company's focus on community development and land acquisition has contributed to the growth, along with favorable market conditions and a strong demand for housing.

7. Detailed Products

Single-Family Homes

Hovnanian Enterprises, Inc. builds and sells single-family homes in various communities across the United States.

Townhomes

The company also builds and sells townhomes, offering a more affordable and low-maintenance option for homebuyers.

Condominiums

Hovnanian Enterprises, Inc. develops and sells condominiums, offering a range of amenities and services to residents.

Active Adult Communities

The company builds and sells homes in active adult communities, designed for residents 55 and older.

Resort-Style Communities

Hovnanian Enterprises, Inc. develops and sells homes in resort-style communities, offering luxurious amenities and services.

8. Hovnanian Enterprises, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Hovnanian Enterprises, Inc. operates in the homebuilding industry, where substitutes are limited. However, there is a growing trend towards renting, which could be a substitute for buying a home.

Bargaining Power Of Customers

Hovnanian Enterprises, Inc. has a diverse customer base, which reduces the bargaining power of individual customers. Additionally, the company's focus on customer service and quality helps to build customer loyalty.

Bargaining Power Of Suppliers

Hovnanian Enterprises, Inc. relies on suppliers for materials and labor, but the company's scale and negotiating power help to mitigate the bargaining power of suppliers.

Threat Of New Entrants

The homebuilding industry has high barriers to entry, including regulatory hurdles and significant capital requirements, which limits the threat of new entrants.

Intensity Of Rivalry

The homebuilding industry is highly competitive, with many established players competing for market share. Hovnanian Enterprises, Inc. must differentiate itself through quality, customer service, and pricing to maintain its market position.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 66.44%
Debt Cost 5.88%
Equity Weight 33.56%
Equity Cost 17.05%
WACC 9.63%
Leverage 197.95%

11. Quality Control: Hovnanian Enterprises, Inc. passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Karat Packaging

A-Score: 6.6/10

Value: 6.1

Growth: 7.9

Quality: 7.4

Yield: 9.0

Momentum: 3.0

Volatility: 6.0

1-Year Total Return ->

View Full Report
Stock-Card
Legacy Housing

A-Score: 5.3/10

Value: 6.0

Growth: 5.9

Quality: 7.8

Yield: 0.0

Momentum: 6.0

Volatility: 6.3

1-Year Total Return ->

View Full Report
Stock-Card
Hovnanian

A-Score: 3.8/10

Value: 8.6

Growth: 4.6

Quality: 5.6

Yield: 0.0

Momentum: 2.0

Volatility: 2.0

1-Year Total Return ->

View Full Report
Stock-Card
Beazer Homes USA

A-Score: 3.7/10

Value: 7.8

Growth: 3.9

Quality: 3.8

Yield: 0.0

Momentum: 2.5

Volatility: 4.0

1-Year Total Return ->

View Full Report
Stock-Card
LGI Homes

A-Score: 3.4/10

Value: 8.1

Growth: 3.7

Quality: 4.6

Yield: 0.0

Momentum: 0.5

Volatility: 3.7

1-Year Total Return ->

View Full Report
Stock-Card
United Homes

A-Score: 2.5/10

Value: 6.8

Growth: 2.7

Quality: 3.5

Yield: 0.0

Momentum: 1.5

Volatility: 0.7

1-Year Total Return ->

View Full Report

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

103.66$

Current Price

103.66$

Potential

-0.00%

Expected Cash-Flows