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

Insider and Institutional Ownership

30.0% of Hovnanian Enterprises shares are held by institutional investors. Comparatively, 78.8% of NVR shares are held by institutional investors. 15.4% of Hovnanian Enterprises shares are held by company insiders. Comparatively, 11.3% of NVR shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Profitability

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

Net Margins Return on Equity Return on Assets
Hovnanian Enterprises 0.56% -8.20% 0.98%
NVR 7.90% 34.48% 17.23%

Valuation and Earnings

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

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Hovnanian Enterprises $2.66 billion 0.12 $137.91 million $0.09 26.67
NVR $5.97 billion 1.56 $734.42 million $113.39 21.90

NVR has higher revenue and earnings than Hovnanian Enterprises. NVR is trading at a lower price-to-earnings ratio than Hovnanian Enterprises, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent ratings for Hovnanian Enterprises and NVR, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Hovnanian Enterprises 1 1 0 0 1.50
NVR 0 3 1 0 2.25

Hovnanian Enterprises currently has a consensus target price of $1.55, indicating a potential downside of 35.42%. NVR has a consensus target price of $2,690.00, indicating a potential upside of 8.33%. Given NVR’s stronger consensus rating and higher probable upside, analysts clearly believe NVR is more favorable than Hovnanian Enterprises.

Risk and Volatility

Hovnanian Enterprises has a beta of 1.72, meaning that its stock price is 72% more volatile than the S&P 500. Comparatively, NVR has a beta of 0.65, meaning that its stock price is 35% less volatile than the S&P 500.

Summary

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

Hovnanian Enterprises Company Profile

Hovnanian Enterprises, Inc. is a builder of residential homes. The Company designs, constructs, markets and sells single-family detached homes, attached townhomes and condominiums, urban infill and active lifestyle homes in planned residential developments. The Company has two distinct operations: homebuilding and financial services. Its homebuilding operations consist of six segments: Northeast: New Jersey and Pennsylvania; Mid-Atlantic: Delaware, Maryland, Virginia, Washington, District of Columbia, and West Virginia; Midwest: Illinois and Ohio; Southeast: Florida, Georgia and South Carolina; Southwest: Arizona and Texas, and West: California. Its financial services operations provide mortgage loans and title services to the customers of its homebuilding operations. The Company markets and builds homes for first-time buyers, first-time and second-time move-up buyers, luxury buyers, active lifestyle buyers and empty nesters.

NVR Company Profile

NVR, Inc. is engaged in the construction and sale of single-family detached homes, townhomes and condominium buildings. The Company’s segments are Homebuilding Mid Atlantic, Homebuilding North East, Homebuilding Mid East, Homebuilding South East and Mortgage Banking. Its Homebuilding Mid Atlantic segment operates in various geographic regions, which include Maryland, Virginia, West Virginia, Delaware and Washington, District of Columbia (D.C.). Its Homebuilding North East segment operates in various geographic regions, which include New Jersey and Eastern Pennsylvania. Its Homebuilding Mid East segment operates in various geographic regions, which include New York, Ohio, Indiana and Illinois, The Homebuilding South East segment operates in various geographic regions, which include North Carolina, South Carolina, Florida and Tennessee. The Mortgage Banking segment provides mortgage-related services to home building customers through its mortgage banking operations.

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