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Hovnanian Enterprises Inc (NYSE:HOV)
Piotroski F-Score
7 (As of Today)

Good Sign:

Piotroski F-Score of 7 is 7, indicating very healthy situation.

The zones of discrimination were as such:

Good or high score = 8 or 9
Bad or low score = 0 or 1

Hovnanian Enterprises Inc has an F-score of 7 indicating the company's financial situation is typical for a stable company.

HOV' s 10-Year Piotroski F-Score Range
Min: 1   Max: 8
Current: 7

1
8

During the past 13 years, the highest Piotroski F-Score of Hovnanian Enterprises Inc was 8. The lowest was 1. And the median was 4.


Definition

How is the Piotroski F-Score calculated?

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Apr14) TTM:Last Year (Apr13) TTM:
Net Income was -7.902 + -24.523 + 32.819 + 8.466 = $9 Mil.
Cash Flow from Operations was -55.054 + -131.052 + 56.665 + -31.477 = $-161 Mil.
Revenue was 449.929 + 364.048 + 591.687 + 478.357 = $1,884 Mil.
Gross Profit was 79.86 + 65.007 + 94.541 + 93.513 = $333 Mil.
Total Assets at the begining of this year (Apr13) was $1,619 Mil.
Total Assets was $1,839 Mil.
Long-Term Debt was $1,706 Mil.
Total Current Assets was $1,570 Mil.
Total Current Liabilities was $592 Mil.
Net Income was 1.318 + -11.308 + -84.41 + 34.676 = $-60 Mil.

Revenue was 422.998 + 358.211 + 487.044 + 387.011 = $1,655 Mil.
Gross Profit was 69.253 + 58.511 + 58.016 + 66.846 = $253 Mil.
Total Assets at the begining of last year (Apr12) was $1,518 Mil.
Total Assets was $1,619 Mil.
Long-Term Debt was $1,529 Mil.
Total Current Assets was $1,331 Mil.
Total Current Liabilities was $538 Mil.

Profitability

Q1. Return on Assets (ROA)

Net income before extraordinary items for the year divided by total assets at the beginning of the year.

Score 1 if positive, 0 if negative.

Hovnanian Enterprises Inc's current net income was 9. ==> Positive ==> Score 1.

Q2. Cash Flow Return on Assets (CFROA)

Net cash flow from operating activities (operating cash flow) divided by total assets at the beginning of the year.

Score 1 if positive, 0 if negative.

Hovnanian Enterprises Inc's current cash flow from operations was -161. ==> Negative ==> Score 0.

Q3. Change in Return on Assets

Compare this year’s return on assets (1) to last year’s return on assets.

Score 1 if it’s higher, 0 if it’s lower.

ROA (This Year)=Net Income/Total Assets at the beginning of this year (Apr13)
=8.86/1618.887
=0.0054729

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (Apr12)
=-59.724/1517.943
=-0.03934535

Hovnanian Enterprises Inc's return on assets of this year was 0.0054729. Hovnanian Enterprises Inc's return on assets of last year was -0.03934535. ==> This year is higher. ==> Score 1.

Q4. Quality of Earnings (Accrual)

Compare Cash flow return on assets (2) to return on assets (1)

Score 1 if CFROA > ROA, 0 if CFROA =< ROA.

Hovnanian Enterprises Inc's current net income was 9. Hovnanian Enterprises Inc's current cash flow from operations was -161. ==> -161 =< 9 ==> CFROA =< ROA ==> Score 0.

Funding

Q5. Change in Gearing or Leverage

Compare this year’s gearing (long-term debt divided by average total assets) to last year’s gearing.

Score 0 if this year's gearing is higher, 1 otherwise.

Gearing (This Year)=Long-Term Debt/Total Assets
=1706.172/1838.823
=0.92786092

Gearing (Last Year)=Long-Term Debt/Total Assets
=1529.194/1618.887
=0.94459589

Hovnanian Enterprises Inc's gearing of this year was 0.92786092. Hovnanian Enterprises Inc's gearing of last year was 0.94459589. ==> This year is lower or equal to last year. ==> Score 1.

Q6. Change in Working Capital (Liquidity)

Compare this year’s current ratio (current assets divided by current liabilities) to last year’s current ratio.

Score 1 if this year'’s current ratio is higher, 0 if it’s lower

Current Ratio (This Year)=Total Current Assets/Total Current Liabilities
=1569.586/591.741
=2.65248817

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=1331.117/538.194
=2.47330331

Hovnanian Enterprises Inc's current ratio of this year was 2.65248817. Hovnanian Enterprises Inc's current ratio of last year was 2.47330331. ==> This year's current ratio is higher. ==> Score 1.

Q7. Change in Shares in Issue

Compare the number of shares in issue this year, to the number in issue last year.

Score 0 if there is larger number of shares in issue this year, 1 otherwise.

Hovnanian Enterprises Inc's number of shares in issue this year was 146.3. Hovnanian Enterprises Inc's number of shares in issue last year was 147.2. ==> There is smaller number of shares in issue this year, or the same. ==> Score 1.

Efficiency

Q8. Change in Gross Margin

Compare this year’s gross margin (gross profit divided by sales) to last year’s.

Score 1 if this year’s gross margin is higher, 0 if it’s lower.

Gross Margin (This Year)=Gross Profit/Revenue
=332.921/1884.021
=0.17670769

Gross Margin (Last Year)=Gross Profit/Revenue
=252.626/1655.264
=0.15261976

Hovnanian Enterprises Inc's gross margin of this year was 0.17670769. Hovnanian Enterprises Inc's gross margin of last year was 0.15261976. ==> This year's gross margin is higher. ==> Score 1.

Q9. Change in asset turnover

Compare this year’s asset turnover (total sales divided by total assets at the beginning of the year) to last year’s asset turnover ratio.

Score 1 if this year’s asset turnover ratio is higher, 0 if it’s lower

Asset Turnover (This Year)=Revenue/Total Assets at the beginning of this year (Apr13)
=1884.021/1618.887
=1.16377548

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (Apr12)
=1655.264/1517.943
=1.09046519

Hovnanian Enterprises Inc's asset turnover of this year was 1.16377548. Hovnanian Enterprises Inc's asset turnover of last year was 1.09046519. ==> This year's asset turnover is higher. ==> Score 1.

Evaluation

Piotroski F-Score=Q1+Q2+Q3+Q4+Q5+Q6+Q7+Q8+Q9
=1+0+1+0+1+1+1+1+1
=7

Good or high score = 8 or 9

Bad or low score = 0 or 1

Hovnanian Enterprises Inc has an F-score of 7 indicating the company's financial situation is typical for a stable company.


Explanation

The developer of the system is Joseph D. Piotroski is relatively unknown accounting professor who shuns publicity and rarely gives interviews.

He graduated from the University of Illinois with a B.S. in accounting in 1989, received an M.B.A. from Indiana University in 1994. Five years later, in 1999, after earning a Ph.D. in accounting from the University of Michigan, he became an associate professor of accounting at the University of Chicago.

In 2000, he wrote a research paper called "Value Investing: The Use of Historical Financial Statement Information to Separate Winners from Losers" (pdf).

He wanted to see if he can develop a system (using a simple nine-point scoring system) that can increase the returns of a strategy of investing in low price to book (referred to in the paper as high book to market) value companies.

What he found was something that exceeded his most optimistic expectations.

Buying only those companies that scored highest (8 or 9) on his nine-point scale, or F-Score as he called it, over the 20 year period from 1976 to 1996 led to an average out-performance over the market of 13.4%.

Even more impressive were the results of a strategy of investing in the highest F-Score companies (8 or 9) and shorting companies with the lowest F-Score (0 or 1).

Over the same period from 1976 to 1996 (20 years) this strategy led to an average yearly return of 23%, substantially outperforming the average S&P 500 index return of 15.83% over the same period.


Related Terms

Net Income, Cash Flow from Operations, Revenue, Gross Profit, Total Assets, Long-Term Debt, Total Current Assets, Total Current Liabilities


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Hovnanian Enterprises Inc Annual Data

Oct04Oct05Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13
Q1 1110001001
Q2 0001101001
Q3 0000011011
Q4 0001111100
Q5 1100000011
Q6 1111100001
Q7 1011000000
Q8 0100001111
Q9 0000001011
F-score 4434326247

Hovnanian Enterprises Inc Quarterly Data

Jan12Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14
Q1 0000000111
Q2 0000000100
Q3 0111110111
Q4 0100111000
Q5 0011110101
Q6 0000001111
Q7 0000000001
Q8 0111111111
Q9 1111111111
F-score 1444554757
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