- On the surface, HOV seems cheap but the market has, quite correctly, not forgotten debt, management conflicts and one-time impacts.
- 2021 earnings were inflated by a one-time asset revaluation, but even adjusted earnings with a P/E of 1.5 look unsustainable.
- We pass on Hovnanian due to high debt levels, conflicted management and mortgage rates likely to keep rising well past 5%.
- We prefer other homebuilders like Lennar and D.R. Horton who are better prepared for any slowdown, although be patient.
For further details see:
Rising Rates Make Hovnanian's Debt A Concern