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HOV, Hovnanian Enterprises Inc.

Homebuilders capital-intensive Distress / turnaroundCyclical

Our financial services operations provide mortgage loans and title services to the customers of our homebuilding operations.

Through its subsidiaries, HEI designs, constructs, markets, and sells single-family detached homes, attached townhomes and condominiums, urban infill, and active lifestyle homes in planned residential developments and is one of the nation's largest builders of residential homes.

Has two distinct operations: homebuilding and financial services.

Latest annual: FY2025 10-K

HOV · Hovnanian Enterprises Inc.

The business

What it sells, where the money comes from, the kind of company it is.

Revenue · FY2025

$3.0B

−0.9% YoY · 5% 5-yr CAGR

Vital signs · TTM, with 5-yr average

Revenue $2.9B 5-yr avg $2.9B

Operating margin 1.8% 5-yr avg 7.3%

ROIC 2% 5-yr avg 10%

Owner-earnings margin 10% 5-yr avg 6%

Free cash flow margin 9% 5-yr avg 6%

The business in brief

read the 10-K →

What this business is and what moves its needle, from its own SEC filings.

Situation: Distress / turnaround. Thin interest coverage, or operating cash burned against real debt, across the record. The balance sheet carries this situation; the debt schedule sets the clock. Cyclical. Margins collapse and recover repeatedly across the record; a single year, good or bad, misstates the through-cycle earning power.
What moves the needle: Operating margin has run about 1.1% through the cycle, a thin margin, where volume, cost discipline and the price it gets all bear on the result. The margin is cyclical, swinging between −1.3% and 10% over the years, so the through-cycle figure carries more than any single year — and the balance sheet at the trough more than the peak. On its own account, the filing leans hardest on pricing power & competition, set against the numbers in what the filing emphasizes, below.
Is it a good business?: Return on capital has rarely cleared the cost of capital (median 3%, above 15% in 0 of 10 years). By owner earnings: roughly 7% of revenue reaches owners as cash, though it swings. The cycle and the balance sheet decide this one; the worst year tells more than the median, and the rest is in the 10-K.

Every line is arithmetic on the company's filings, shown in full in the sections below.

The record

Ten years of arithmetic, read across the cycle.

The record, 2016–2025

realized figures from each filing · older years to the left

2016’16	2017’17	2018’18	2019’19	2020’20	2021’21	2022’22	2023’23	2024’24	2025’25	TTMTTMApr 2026
											Income statement
$2.8B	$2.5B	$2.0B	$2.0B	$2.3B	$2.8B	$2.9B	$2.8B	$3.0B	$3.0B	$2.9B	RevenueRevenue
$10M	($3M)	($8M)	($26M)	$26M	$185M	$298M	$238M	$263M	$73M	$52M	Operating incomeOp. inc.
0.4%	−0.1%	−0.4%	−1.3%	1.1%	6.6%	10.2%	8.7%	8.8%	2.4%	1.8%	Operating marginOp. mgn
($3M)	($332M)	$5M	($42M)	$46M	$550M	$195M	$179M	$223M	$51M	$24M	Net incomeNet inc.
—	—	45%	—	9%	—	33%	22%	25%	30%	34%	Effective tax rateTax rate
											Cash flow & returns
$387M	$302M	($67M)	($249M)	$293M	$210M	$89M	$435M	$24M	$188M	$296M	Operating cash flowOp. cash
$4M	$4M	$3M	$4M	$5M	$5M	$5M	$9M	$8M	$14M	$15M	DepreciationDeprec.
$383M	$629M	($78M)	($212M)	$238M	($353M)	($121M)	$233M	($232M)	$106M	$244M	Working capital & otherWC & other
$8M	$6M	$5M	$4M	$3M	$6M	$13M	$19M	$18M	$22M	$24M	CapexCapex
0.3%	0.3%	0.3%	0.2%	0.1%	0.2%	0.4%	0.7%	0.6%	0.7%	0.8%	Capex / revenueCapex/rev
$383M	$297M	($70M)	($253M)	$289M	$204M	$84M	$426M	$16M	$174M	$280M	Owner earningsOwner earn.
13.9%	12.1%	−3.5%	−12.6%	12.3%	7.3%	2.9%	15.5%	0.5%	5.9%	9.6%	Owner earnings marginOE mgn
$379M	$295M	($72M)	($253M)	$289M	$204M	$77M	$416M	$6M	$166M	$271M	Free cash flowFCF
13.8%	12.0%	−3.6%	−12.6%	12.3%	7.3%	2.6%	15.1%	0.2%	5.6%	9.3%	Free cash flow marginFCF mgn
—	—	—	$0	$0	$0	$11M	$11M	$11M	$11M	$11M	Dividends paidDiv. paid
—	—	—	—	$0	$0	$12M	$5M	$27M	$30M	—	BuybacksBuybacks
0%	-0%	-0%	-2%	2%	13%	13%	11%	12%	3%	2%	ROICROIC
—	—	—	—	—	315%	51%	31%	28%	6%	3%	Return on equityROE
—	—	—	—	—	315%	48%	29%	27%	5%	2%	Retained to equityRetained/eq
											Balance sheet
$347M	$469M	—	—	—	—	—	—	—	—	$222M	Cash & investmentsCash+inv
$2.4B	$1.9B	$1.7B	$1.9B	$1.8B	$2.3B	$2.6B	$2.5B	$2.6B	$2.6B	$2.8B	Total assetsAssets
$1.6B	$1.6B	$1.4B	$1.5B	$1.4B	$1.2B	$1.1B	$1.1B	$896M	$901M	$978M	Total debtDebt
$1.3B	$1.1B	$1.4B	$1.5B	$1.4B	$1.2B	$1.1B	$1.1B	$896M	$901M	$756M	Net debt / (cash)Net debt
0.1×	-0.0×	-0.1×	-0.2×	0.1×	1.1×	2.2×	1.8×	2.2×	—	0.4×	Interest coverageInt. cov.
($129M)	($460M)	($454M)	($490M)	($437M)	$175M	$383M	$582M	$800M	$831M	$825M	Shareholders’ equityEquity
0.1%	0.0%	0.2%	0.0%	0.1%	0.3%	0.4%	0.5%	0.8%	0.6%	0.4%	Stock comp / revenueSBC/rev
											Per share
5.9M	5.9M	6.1M	6.0M	6.6M	6.4M	6.7M	6.7M	7.0M	6.9M	6.9M	Shares out (diluted)Shares
$466.64	$414.97	$327.94	$337.96	$356.00	$435.16	$434.34	$413.44	$428.85	$432.18	$422.36	Revenue / shareRev/sh
$-0.48	$-56.23	$0.74	$-7.06	$7.03	$86.03	$29.00	$26.88	$31.81	$7.44	$3.46	EPS (diluted)EPS
$65.01	$50.33	$-11.52	$-42.41	$43.96	$31.94	$12.49	$63.98	$2.27	$25.31	$40.57	Owner earnings / shareOE/sh
$64.26	$49.95	$-11.86	$-42.41	$43.96	$31.94	$11.43	$62.47	$0.83	$24.11	$39.29	Free cash flow / shareFCF/sh
—	—	—	$0.00	$0.00	$0.00	$1.59	$1.61	$1.53	$1.55	$1.55	Dividends / shareDiv/sh
$1.36	$1.10	$0.86	$0.67	$0.51	$0.93	$1.87	$2.82	$2.55	$3.21	$3.50	Cap. spending / shareCapex/sh
$-21.79	$-77.92	$-74.69	$-82.18	$-66.36	$27.35	$56.93	$87.27	$114.22	$120.57	$119.39	Book value / shareBVPS

Share counts before 2017 are restated ×1/25 for a stock split, so per-share figures sit on one basis.

Per-share growththe realized rate an owner's share compounded

	9-yr	5-yr
Revenue / share	−0.8%/yr	+4.0%/yr
Owner earnings / share	−10.0%/yr	−10.5%/yr
EPS	—	+1.1%/yr
Capital spending / share	+10.0%/yr	+44.2%/yr

The record, charted

FY2016–2025

Each measure over its full record; the current point and the worst year marked. Share counts on the current split basis.

Share count

7Mpeak FY2024

ROIC

3%low FY2019

Net debt ÷ owner earnings

5.2×peak FY2024

Owner earnings vs. net income

Owner earningsNet income

The accountant's number, and the cash an owner can take; the gap is the tell.

$174Mowner earningsvs.$51Mnet incomelow FY2019

Where the cash went

ReinvestBuybacksDividendsAcquisitionsRetained

Each year's operating cash, by what management did with it: the mix, and how it drifts.

FY2016FY2025

Owner-earnings bridge

FY2021–FY2025cash-flow statement, SEC EDGAR →

Net income is the accountant's number; owner earnings is the cash an owner could take out. The walk between them, off the cash-flow statement, and whether the gap is widening or holding.

In fiscal 2025 the business earned $174M of owner earnings, the operating cash left after the $14M it takes just to hold its position. It put $8M more into growth; free cash flow, after that spending, was $166M.

Reported net income$51M

Owner earnings$174M · 6% of revenue

	FY2025	FY2024	FY2023	FY2022	FY2021
Reported net income	$51M	$223M	$179M	$195M	$550M
Depreciation & amortizationnon-cash charge added back	+$14M	+$8M	+$9M	+$5M	+$5M
Stock-based compensationreal costnon-cash, but a real cost	+$17M	+$25M	+$14M	+$10M	+$8M
Working capital & othertiming of cash in and out, other non-cash items	+$106M	−$232M	+$233M	−$121M	−$353M
Cash from operations	$188M	$24M	$435M	$89M	$210M
Maintenance capital expenditurethe spending needed just to hold position and volume	−$14M	−$8M	−$9M	−$5M	−$6M
Owner earnings	$174M	$16M	$426M	$84M	$204M
Growth capital expenditurediscretionary; spent to get bigger, not to stand still	−$8M	−$10M	−$10M	−$7M	—
Free cash flow	$166M	$6M	$416M	$77M	$204M
Owner-earnings marginowner earnings ÷ revenue	6%	1%	15%	3%	7%

Owner earnings is the cash an owner could pull out without starving the business: operating cash less the maintenance capital it must spend to hold its position (here about $14M, roughly its depreciation, the rate its assets wear out). The other $8M of its capital spending is growth it chose, not upkeep it owed; charged only with the maintenance it must do, the business earns well more than the year's free cash flow shows. The cash-flow statement also adds stock comp back as non-cash, but it is a real cost paid in shares; counted as the expense it is (less $17M), owner earnings is nearer $158M.

Maintenance capex is estimated as depreciation where a growing business invests above it; free cash flow is the figure the scorecard's free-cash margin reads.

III

Quality & stewardship

Returns, the balance sheet, capital allocation, and pay.

Owner’s Scorecard

FY2025 10-K · source on SEC EDGAR →

Will it survive?

Can it pay its interest? 0.6×

Does not cover its interest

Operating income $73M ÷ interest expense $121M

What this means
A full year of operating profit didn't cover the interest bill. This is the zombie zone: the business depends on refinancing, asset sales, or forbearance to service its debt.
How heavy is the debt, net of cash? $508M · 7.0× operating profit

Heavy net debt

Cash $469M − debt $977M

What this means
Netting $469M of cash and short-term investments against $977M of debt leaves $508M owed, about 7.0× a year's operating profit (13.4× on the gross debt, before the cash). Net debt is the leverage figure that matters: the cash is already set against the debt. Strategic or illiquid investments aren't counted here.
How long is cash tied up? —

Not enough data

What this means
The filing data didn't include the inputs for this check.

Is it a good business?

Return on invested capital 2%

Below average through the cycle

10-yr median, range -2%–13%; 4% latest = NOPAT $51M ÷ invested capital $1.3B

Industry peers: median 15%

What this means
The rate the business earns on the money tied up in it, Buffett's north star, because over time a stock tracks the ROIC beneath it. Above ~15% sustained hints at a moat; a return below the cost of capital (~8%) erodes value as a business grows rather than building it — the test Buffett weighs most. The headline is the median of the last 10 years (it ran 4% most recently), so one peak or trough year doesn't set the verdict. Asset-light businesses (R&D expensed, little capital) read artificially high, pair this with Owner Earnings.
Owner-earnings margin 6%

Solid through the cycle

10-yr median margin, range -13%–15%; latest $174M = operating cash $188M − maintenance capex $14M

Industry peers: median 3%

What this means
What an owner could take out without starving the business: operating cash less the maintenance capital it must spend to hold its position — Buffett's owner earnings. That's 6% of revenue this year, a 6% median across 10 years. Treating stock comp as the real expense it is (less $17M of SBC) leaves $158M.
Are earnings backed by cash? 3.67×

Cash-backed

Cash from ops $188M ÷ net income $51M

What this means
How much of reported profit showed up as operating cash. Above 1× is reassuring; well below suggests earnings lean on accruals. One year is noisy, growth and working-capital swings distort it, and this is operating cash, not free cash. Watch the multi-year trend.

How is the cash used?

Where do the earnings go? 23%

Reinvests most of it

Dividends + buybacks $41M ÷ Owner Earnings $174M

What this means
Of $174M Owner Earnings, $41M (23%) went back to shareholders, $11M dividends, $30M buybacks. Net of $17M stock comp, the real buyback was about $14M. Returning most of it is the mark of a mature business with little left to reinvest at a high return; reinvesting most could mean a long runway, or empire-building. The split doesn't say which; the return earned on it (see ROIC) does.
Investing or harvesting? 1.59×

Expanding

Capex $22M ÷ depreciation $14M

What this means
Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.

Graham’s defensive tests · 1 of 3 met

Graham’s numerical criteria for the defensive investor (The Intelligent Investor, ch. 14), run on the filings. A floor of safety, not a buy signal; many fine modern businesses fail his strictest liquidity rules by design.

Adequate size Pass

Revenue ≥ $2B · $3.0B

What this means
Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.
Strong liquidity —

Current ratio ≥ 2× · —

What this means
Current assets / liabilities not in the data yet.
Earnings stability Miss

A profit every year (10-yr record) · 3 loss years

What this means
Graham wanted earnings in each of the past ten years, the stability a defensive owner leans on.
Dividend record Miss

Uninterrupted dividends · 4 of 10 yrs

What this means
An unbroken dividend was Graham's mark of durability. He wanted twenty years; the filings show about ten, and a single suspension breaks the streak. Non-payers, many fine modern compounders, fall outside his defensive net by design.
Earnings growth —

Earnings +33% over the record · —

What this means
Earnings were negative early in the record, a growth rate isn't meaningful.
Moderate price —

P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price

What this means
Graham's valuation gate, the wall he kept between a sound business and a sound investment. Three-year average earnings are $23.42/share (latest year $7.94), the averaged base the calculator's gate runs on, and book value is $128.77/share. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.

Durability & moat, 2016–2025

Whether the record’s returns held, and what the capital reinvested earned.

Profitable years 7 of 10

What this means
Lost money in 3 year(s), look at what happened there before trusting the average.
Return on capital ≥ 15% 0 of 10 yrs

What this means
A moat shows up as a high return on invested capital that holds year after year, not one good vintage.
Operating margin −0% → 7% (3-yr avg ends)

In the filing’s words The record and the words agree: the margin widened and the filing attributes the gain to its own pricing, not volume alone.

What this means
Through the cycle the operating margin widened — about −0% early to 7% lately, median 1% — pricing power intact or improving.
Reinvestment, incremental ROIC 19%

What this means
Every extra dollar the business reinvested came back at a high incremental return — the lens GBM read for a moat that reinvests rather than merely harvests. The record and the 10-K are where you check whether the rate holds.
Owner earnings growth −13%/yr

What this means
Owner earnings shrank about 13% a year over the record.
Worst year 2019 · −1.3% op. margin

What this means
Operations went underwater in 2019, understand why before trusting the good years.
Dividend record paid

What this means
Paid a dividend in 4 of the years on record.

Does AI threaten the moat?

Low contestability

The moat is physical, regulated or balance-sheet-funded, the kind AI cuts costs within but does not contest.

AI is unlikely to contest a moat that is physical, regulated or balance-sheet-funded; here it reads more as a cost tool than a threat.

Read from the filing's own risk factors, paired with the industry's structure under its SIC code; the durability is read above, the price below.

All figures as filed; the source filing is linked above.

How the cash was used, 2016–2025

Over the record, the business generated $1.6B of operating cash; how management split it reads as a deleverager, a meaningful share of cash went to paying down debt.

Reinvested$104M · 6%
Dividends$43M · 3%
Buybacks$74M · 5%
Retained (debt / cash)$1.4B · 86%

Returned to owners$117M
8% of the owner earnings the business produced over the span, $43M as dividends and $74M as buybacks.
Source of fundingOperating cash
Operating cash covered reinvestment and returns; over the span debt fell $628M and cash and short-term investments fell $125M.
Average price paid for buybacks$39.50
Across the years where the filing reports a share count, 0M shares were bought for $17M, about $39.50 each.
Net change in share count17.1%
The diluted count rose from 6M to 7M: issuance (stock pay, deals) outran any buybacks, so owners were diluted on net.
Dividend record$1.55/sh
Paid in 4 of the years on record. It was never cut over the span.
Return on what it retained0%
Of the earnings it kept rather than paid out ($756M over the span), annual owner earnings (first three years vs last three) grew $2M, so each retained $1 added about 0.00 of yearly owner earnings. Buffett's test, run on owner earnings instead of market value.

Buybacks are gross of stock issued to staff; the share-count line above is the net of that, the figure that decides whether owners gained. The average price paid blends a year of purchases (and any accelerated repurchase), so it is close, not exact. The record of where the cash went and on what terms.

Management, ownership & pay

read the proxy →

From the proxy: how much of the business the people running it own, and how they are paid, beside what the business earned for its owners in the same years.

Fiscal year	Chief executive	Pay, as filed	“Actually paid”	Owner earnings
2021	Mr. Ara Hovnanian	$12.5M	$38.8M	$204M
2022	Mr. Ara Hovnanian	$16.5M	$6.5M	$84M
2023	Mr. Ara Hovnanian	$9.5M	$25.8M	$426M
2024	Mr. Ara Hovnanian	$13.2M	$48.3M	$16M
2025	Mr. Ara Hovnanian	$13.7M	$9.4M	$174M

Both pay figures are the company’s own, from the pay-versus-performance table its proxy statement files. “As filed” is the Summary Compensation Table total: salary, bonus, and equity awards at their value on the day of grant. “Actually paid” is the SEC’s prescribed recalculation, which re-marks those equity awards to what they became as they vested; it can swing far above or below the filed figure in either direction, and negative years occur. Owner earnings are the whole business's, from the record above, for the same fiscal years.

Insider ownership0.5%
The stake all directors and executive officers hold together, per the 2026 proxy: skin in the game, the first thing Munger reads.
Stock-based compensation$17M
The slice of the business handed to employees in shares this year, 1% of revenue, equal to 23% of operating profit. Buffett's oldest accounting fight: this is compensation, compensation is an expense, real whether or not the headline earnings admit it. One trap: the cash-flow statement adds SBC back, so the operating cash, and the owner earnings drawn from it, are flattered by exactly this amount; counted as the cost it is, what an owner keeps is lower.

Inverting the record

Invert: instead of why Hovnanian Enterprises Inc. is a good business, the question is what would make owning it a mistake, and whether those marks are in the record. Disconfirming tests across 2016–2025.

1 of the 4 tests turned up something to look into; the other 3 came back clean.

Look hereDid the share count rise anyway?17.1%
Diluted shares grew 17.1% over 2016–2025, even as the company spent $74M on buybacks. The repurchases were a treadmill: stock issued to staff outran them, so owners' slice still shrank. Read the buyback line beside this one, not on its own.

And these came back clean

Is it less profitable than it was?
Did debt outgrow the business?
Did reported profit become cash?

Each test is read from the filings and is noisy alone; a flag can mark a cyclical trough or a year of heavy investment as easily as a problem. The filing says which.

What an owner would ask, FY2025

read the 10-K →

Which reported numbers are a judgment call?
Management names Income taxes, Insurance reserves as critical estimates
each rests partly on management's judgment; the filing's note sets out the assumptionsverify →

The questions the record and the charts do not answer on their own; each carries the figure and the place to look.

Peers, Homebuilders

The same industry, side by side on owner economics. Each figure is a through-cycle median, so a peak or trough year can’t distort it; the group median at the foot is the line to read each against.

Company	Revenue	Gross margin	Op. margin	ROIC	Owner earn. margin
MHOM/I Homes Inc.	$4.4B	23%	11.0%	20%	3%
DFHDream Finders Homes Inc.	$4.3B	16%	7.8%	41%	3%
CCSCentury Communities Inc.	$4.1B	—	7.9%	6%	-1%
ECGEverus Construction Group Inc.	$3.7B	12%	6.7%	29%	4%
HOVHovnanian Enterprises Inc.	$3.0B	—	1.8%	3%	7%
BZHBeazer Homes USA Inc.	$2.4B	16%	3.9%	5%	3%
GRBKGreen Brick Partners Inc.	$2.0B	26%	15.8%	15%	-0%
LGIHLGI Homes Inc.	$1.7B	25%	13.3%	11%	-7%
Group median	—	—	7.8%	13%	3%

The price

What a price has to assume.

What the price implies

reverse-DCF

Type today's close and see the owner-earnings growth you'd have to believe to justify it, beside what Hovnanian Enterprises Inc. has delivered.

Today’s price $

Through the cycle, Hovnanian Enterprises Inc. earns about $197M on its 6.6% median owner-earnings margin. This year’s 5.9% margin runs in line with that. Normalize, below, values the price on that through-cycle figure rather than the latest year.

Base Normalize · through-cycle ($197M) Net of stock comp (−$12M) Steady-state · maintenance capex ($282M)

—

The assumptions Required return 9% Years of high growth 10 Terminal growth 2.5%

9.0% = the 4.55% 10-year Treasury (Jul 15, 2026) + 4.45 points of equity premium. The rate you require is yours to set.

Enter a price above to run it.

Implied by the price—

Owner-earnings growth · ’21→’25−10%/yr

Owner-earnings growth · ’16→’25−14%/yr

Owner-earnings yield—

P/E (3-yr earnings ’23–’25)—

P/B—

Graham’s price gate—

Graham capped the multiple at 15×; Buffett and Munger let that rule go: a wonderful business can deserve 50× if the thesis holds. The gate marks the bargain-hunter's floor.

Against a high-grade bond: Graham’s yardstick bond yield%

Prefilled with the 10-year Treasury (4.55%, as of Jul 15, 2026). Edit it for today’s exact figure, or a AAA corporate yield.

Graham measured a stock against the bond you could own instead, the heart of his margin of safety. Enter a price above to weigh the owner-earnings yield against this bond.

Free cash flow $271M on 6M shares outstanding (a weighted basic average, the only count this filer tags); net debt $756M. The if-converted diluted count is 7M, 7% above the shares outstanding: the dilution overhang (convertibles, options) a buyer inherits. The base is the latest year by default; Normalize values it on the through-cycle median owner-earnings margin (to avoid paying on a peak year). Net of stock comp treats option pay as the expense it is. Capex ($24M) runs well above depreciation ($15M), so this is a build-out; Steady-state swaps total capex for maintenance (≈ depreciation), lifting the base to about $282M, the cash it would throw off if it stopped expanding. The dials set the multiple a growth belief justifies; the price, and every dollar on this page, is yours.

Weigh HOV against another business →

Cite: Owner Scorecard, "Hovnanian Enterprises Inc. (HOV), the owner's record," https://ownerscorecard.com/c/HOV, data as of 2026-07-09.

Manual order: ← HOPE its page in the Manual HP →

Industry order: ← GRBK the Homebuilders chapter KBH →