NVR - Hovnanian: A Beleaguered Builder Focusing On ROIC
In 1990, NVR Inc. (NVR) filed for chapter 11 bankruptcy and realized it needed to make wholesale changes to its business model. What followed has been stunning returns for investors. NVR has outperformed the capital-intensive and fragmented housing industry by focusing on its return on invested capital ((ROIC)).
Hovnanian (HOV), on the other hand, has been the poster child for mismanagement. The company recklessly binged on acquisitions during the housing bubble and has struggled to recover ever since.
Promisingly, Hovnanian has quietly positioned itself for a revival. Its financial position has