Hovnanian a value stock?

HappyHarry said: "Sure it's selling at over $70, but the P/E is still [url=http://finance.yahoo.com/q?s=HOV]low[/url]. The housing boom is not quite over yet, is it?"

sp0om said: "I've had my eye on this stock since July 1st. Fundamentally, the company looks pretty good except for a few things. The short percent is over 10% at 11.3% and there is negative cashflow (haven't put in the time to learn more about cash flow, but I'm pretty sure negative is not a good thing). HOV still shows technical strength."

HappyHarry said: "They still appear to be in a boom cycle too. How long that wiill last, I cannot guess but I bet we're safe for the next six months."

alhamid said: "Why is the P/E so low?"

sp0om said: "Relative to the industry, HOV's PE ratio is very normal. Every one of its competitors have very similar PE ratios."

HappyHarry said: "Investors have kept the P/Es relatively low for the home builders because they fear a boom, or at the very least they view the stocks as cyclical."

trickynick said: "In my opinion, for a stock to be considered a value stock the company has to be in a strong cash position relative to long-term debt. This company does not have that going for them according to their most recent balance sheet I am able to find. [url]http://finance.yahoo.com/q/bs?s=HOV[/url] Check this out: $1511.657 million [b]Long-Term Debt[/b] - $52.636 million [b]Cash & Equivallents[/b] = $1459.021 million [b]Debt Minus Cash[/b] $1459.021 million [b]Debt Minus Cash[/b] / 61.76 million [b]Shares Outstanding[/b] = $23.64 [b]Long-Term Debt Per Share!!![/b] So, when you consider that for every share you buy you assume $23.64 of long-term debt the company owes, the [i]real[/i] P/E ratio turns out to be 14.85. That is still not astronomical as far as P/E goes but I like to think of value stocks as stocks whose balance sheet position [i]subtracts[/i] from their P/E ratio rather than [i]adding[/i] to it."

alhamid said: "nice post nick. good way of looking at it. plus hovnanian is very susceptible to interest rates. an increase can kill stock overnight"

AlfredSokol said: "[quote] The number of developments company-wide on June 30 increased to 323 communities from 285 communities at the end of June 2004, including 13 communities in Orlando from the company's acquisition of Cambridge Homes.[/quote] If their sales growth stays high, maybe their worth a slightly higher valuation."