Financial Contrast: Hovnanian Enterprises (HOV) versus KB Home (KBH)

Hovnanian Enterprises (NYSE: HOV) and KB Home (NYSE:KBH) are both construction companies, but which is the superior business? We will contrast the two companies based on the strength of their risk, dividends, profitability, valuation, institutional ownership, earnings and analyst recommendations.

Volatility & Risk

Hovnanian Enterprises has a beta of 1.67, suggesting that its share price is 67% more volatile than the S&P 500. Comparatively, KB Home has a beta of 1.43, suggesting that its share price is 43% more volatile than the S&P 500.

Institutional and Insider Ownership

41.2% of Hovnanian Enterprises shares are held by institutional investors. Comparatively, 88.4% of KB Home shares are held by institutional investors. 15.4% of Hovnanian Enterprises shares are held by company insiders. Comparatively, 8.6% of KB Home shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Hovnanian Enterprises and KB Home, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Hovnanian Enterprises 1 0 0 0 1.00
KB Home 5 10 1 0 1.75

Hovnanian Enterprises presently has a consensus price target of $1.75, indicating a potential downside of 7.89%. KB Home has a consensus price target of $30.07, indicating a potential upside of 12.86%. Given KB Home’s stronger consensus rating and higher probable upside, analysts plainly believe KB Home is more favorable than Hovnanian Enterprises.

Dividends

KB Home pays an annual dividend of $0.10 per share and has a dividend yield of 0.4%. Hovnanian Enterprises does not pay a dividend. KB Home pays out 5.4% of its earnings in the form of a dividend.

Valuation and Earnings

This table compares Hovnanian Enterprises and KB Home’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Hovnanian Enterprises $2.45 billion 0.11 -$332.19 million N/A N/A
KB Home $4.37 billion 0.53 $180.59 million $1.85 14.40

KB Home has higher revenue and earnings than Hovnanian Enterprises.

Profitability

This table compares Hovnanian Enterprises and KB Home’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Hovnanian Enterprises -15.66% -1.29% -1.18%
KB Home 2.15% 11.16% 4.11%

Summary

KB Home beats Hovnanian Enterprises on 11 of the 14 factors compared between the two stocks.

Hovnanian Enterprises Company Profile

Hovnanian Enterprises, Inc. designs, constructs, markets, and sells residential homes in the United States. It constructs single-family detached homes, attached townhomes and condominiums, urban infill, and active lifestyle homes. The company markets its build homes for first-time buyers, first-time and second-time move-up buyers, luxury buyers, active lifestyle buyers, and empty nesters in 130 communities in 24 markets. It also provides financial services comprising originating mortgages from homebuyers and selling such mortgages in the secondary market, as well as offers title insurance services. The company was founded in 1959 and is headquartered in Red Bank, New Jersey.

KB Home Company Profile

KB Home operates as a homebuilding company in the United States. It builds and sells various homes, including attached and detached single-family residential homes, townhomes, and condominiums primarily for first-time, first move-up, and active adult homebuyers. The company also provides property and casualty insurance, as well as earthquake, flood, and personal property insurance to its homebuyers; title services; and mortgage banking services, including residential mortgage loan originations to its homebuyers. It has operations in California, Arizona, Nevada, Colorado, Texas, Florida, and North Carolina, The company was formerly known as Kaufman and Broad Home Corporation and changed its name to KB Home in January 2001. KB Home was founded in 1957 and is headquartered in Los Angeles, California.

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