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Underperforming Its Peers By A Large Margin In H1
With a 65-year history in the business of homebuilding, a revenue profile that is amongst the top 20 homebuilders, and homes that are currently sold in 17 of
Hovnanian: Not Hugely Compelled To Own, But Not Very Pessimistic Either
Summary
- Hovnanian Enterprises, a mid-cap play in the US homebuilding market, has underperformed other homebuilders by 4x, and other mid-caps by an even larger margin.
- HOV mainly sells single-family homes to first-time home buyers, a cohort that isn't necessarily in the best of health.
- The company has pivoted to a QMI home strategy (79% of sales), which is leading to good conversion of the backlog, but proving to be inimical to margins.
- At a P/E of less than 9x, HOV trades at a 25% discount to the industry, but earnings are poised to contract, and the company does not offer any dividend on its common shares.
- The stock is still trading well below its 200DMA, but the previous pattern of lower-lows appears to have given way to a flattening of the price action, while it no longer looks like one of the more overbought homebuilding stocks.
Investment research, primarily oriented towards uncelebrated/under-covered stocks and ETFs, across North America, Europe and Asia. Seeks to combine both fundamental and technical disciplines while making an investment/trading proposition.
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