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

The zones of discrimination were as such:

Good or high score = 7, 8, 9
Bad or low score = 0, 1, 2, 3

Hovnanian Enterprises Inc has an F-score of 4 indicating the company's financial situation is typical for a stable company.

HOV' s Piotroski F-Score Range Over the Past 10 Years
Min: 1   Max: 8
Current: 4

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 local exchange's currency.

This Year (Jul16) TTM:Last Year (Jul15) TTM:
Net Income was 25.519 + -16.173 + -8.461 + -0.474 = $0 Mil.
Cash Flow from Operations was 12.145 + -65.081 + 33.894 + 225.743 = $207 Mil.
Revenue was 693.204 + 575.605 + 654.723 + 716.85 = $2,640 Mil.
Gross Profit was 107.454 + 74.72 + 77.942 + 94.18 = $354 Mil.
Average Total Assets from the begining of this year (Jul15)
to the end of this year (Jul16) was
(2549.344 + 2602.298 + 2552.74 + 2518.627 + 2388.841) / 5 = $2522.37 Mil.
Total Assets at the begining of this year (Jul15) was $2,549 Mil.
Long-Term Debt was $1,640 Mil.
Total Current Assets was $1,678 Mil.
Total Current Liabilities was $870 Mil.
Net Income was 322.464 + -14.376 + -19.559 + -7.684 = $281 Mil.

Revenue was 698.394 + 445.714 + 468.949 + 540.613 = $2,154 Mil.
Gross Profit was 119.096 + 70.037 + 62.978 + 82.344 = $334 Mil.
Average Total Assets from the begining of last year (Jul14)
to the end of last year (Jul15) was
(1893.728 + 2289.93 + 2461.435 + 2516.994 + 2549.344) / 5 = $2342.2862 Mil.
Total Assets at the begining of last year (Jul14) was $1,894 Mil.
Long-Term Debt was $1,908 Mil.
Total Current Assets was $1,830 Mil.
Total Current Liabilities was $763 Mil.

Profitability

Question 1. 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 (TTM) was 0. ==> Positive ==> Score 1.

Question 2. 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 (TTM) was 207. ==> Positive ==> Score 1.

Question 3. 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 (TTM)/Total Assets at the Beginning of This Year (Jul15)
=0.411/2549.344
=0.00016122

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Jul14)
=280.845/1893.728
=0.14830271

Hovnanian Enterprises Inc's return on assets of this year was 0.00016122. Hovnanian Enterprises Inc's return on assets of last year was 0.14830271. ==> Last year is higher ==> Score 0.

Question 4. 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 (TTM) was 0. Hovnanian Enterprises Inc's current cash flow from operations (TTM) was 207. ==> 207 > 0 ==> CFROA > ROA ==> Score 1.

Funding

Question 5. 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: Jul16)=Long-Term Debt/Average Total Assets from Jul15 to Jul16
=1640.255/2522.37
=0.65028327

Gearing (Last Year: Jul15)=Long-Term Debt/Average Total Assets from Jul14 to Jul15
=1907.693/2342.2862
=0.81445769

Hovnanian Enterprises Inc's gearing of this year was 0.65028327. Hovnanian Enterprises Inc's gearing of last year was 0.81445769. ==> This year is lower or equal to last year. ==> Score 1.

Question 6. 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: Jul16)=Total Current Assets/Total Current Liabilities
=1677.958/870.05
=1.92857652

Current Ratio (Last Year: Jul15)=Total Current Assets/Total Current Liabilities
=1829.563/762.559
=2.39924124

Hovnanian Enterprises Inc's current ratio of this year was 1.92857652. Hovnanian Enterprises Inc's current ratio of last year was 2.39924124. ==> Last year's current ratio is higher ==> Score 0.

Question 7. 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 147.4. Hovnanian Enterprises Inc's number of shares in issue last year was 147. ==> There is larger number of shares in issue this year. ==> Score 0.

Efficiency

Question 8. 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: TTM)=Gross Profit/Revenue
=354.296/2640.382
=0.13418361

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=334.455/2153.67
=0.15529538

Hovnanian Enterprises Inc's gross margin of this year was 0.13418361. Hovnanian Enterprises Inc's gross margin of last year was 0.15529538. ==> Last year's gross margin is higher ==> Score 0.

Question 9. Change in asset turnover

Compare this year’s asset turnover (total sales for the year 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 (TTM)/Total Assets at the Beginning of This Year (Jul15)
=2640.382/2549.344
=1.03571036

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Jul14)
=2153.67/1893.728
=1.1372647

Hovnanian Enterprises Inc's asset turnover of this year was 1.03571036. Hovnanian Enterprises Inc's asset turnover of last year was 1.1372647. ==> Last year's asset turnover is higher ==> Score 0.

Evaluation

Piotroski F-Score= Que. 1+ Que. 2+ Que. 3+Que. 4+Que. 5+Que. 6+Que. 7+Que. 8+Que. 9
=1+1+0+1+1+0+0+0+0
=4

Good or high score = 7, 8, 9
Bad or low score = 0, 1, 2, 3

Hovnanian Enterprises Inc has an F-score of 4 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 local exchange's currency.

Hovnanian Enterprises Inc Annual Data

Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13Oct14Oct15
Question 1 1000100110
Question 2 0110100100
Question 3 0001101110
Question 4 0111110000
Question 5 1000000111
Question 6 1110010001
Question 7 1100000001
Question 8 0000101110
Question 9 0000101110
F-score 4432623653

Hovnanian Enterprises Inc Quarterly Data

Apr14Jul14Oct14Jan15Apr15Jul15Oct15Jan16Apr16Jul16
Question 1 1111110001
Question 2 0000000001
Question 3 1111110000
Question 4 0000000001
Question 5 0111111111
Question 6 1000101000
Question 7 1100011000
Question 8 1011000000
Question 9 1111100000
F-score 6555543114
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