HOV
Hovnanian Enterprises, Inc.
$134.82
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Undervalued
Trading 69.0% below fair value
You pay
$134.82
Bear
$319.00
Fair
$435.00
Bull
$551.00
Bear
$319.00
+136.6%
$29.00 × 14x + net cash
Fair
$435.00
+222.7%
$29.00 × 18x + net cash
Bull
$551.00
+308.7%
$29.00 × 22x + net cash
Key Value Driver
Through-cycle normalized EPS ($29.00)
Implied Market Multiple
4.6x
Summary
Using 7-year normalized EPS of $29.00 at a 18x cycle multiple, the base-case value is $435.00 per share. P/TBV cross-check: 0.8x.
Warnings
This company has a built-in lending arm whose debt is mixed in with the main business. We capped the debt adjustment to avoid overstating what the core business owes.
Key Risks
- Standard 10-year DCF produces unreliable terminal values for cyclicals
- 'Cheap' P/E at cycle peak is the most common value trap — normalize first
- Captive finance subsidiaries have different risk profiles from manufacturing