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Hovnanian Enterprises Inc (NYSE:HOV)
Piotroski F-Score
5 (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 5 indicating the company's financial situation is typical for a stable company.

HOV' s 10-Year Piotroski F-Score Range
Min: 2   Max: 7
Current: 5

2
7

During the past 13 years, the highest Piotroski F-Score of Hovnanian Enterprises Inc was 7. The lowest was 2. 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 (Oct14) TTM:Last Year (Oct13) TTM:
Net Income was -24.523 + -7.902 + 17.105 + 322.464 = $307 Mil.
Cash Flow from Operations was -131.052 + -55.054 + -73.437 + 68.958 = $-191 Mil.
Revenue was 364.048 + 449.929 + 551.009 + 698.394 = $2,063 Mil.
Gross Profit was 65.007 + 79.86 + 110.296 + 127.121 = $382 Mil.
Average Total Assets from the begining of this year (Oct13)
to the end of this year (Oct14) was
(1759.13 + 1787.261 + 1838.823 + 1893.728 + 2289.93) / 5 = $1913.7744 Mil.
Total Assets at the begining of this year (Oct13) was $1,759 Mil.
Long-Term Debt was $1,658 Mil.
Total Current Assets was $1,636 Mil.
Total Current Liabilities was $718 Mil.
Net Income was -11.308 + 1.318 + 8.466 + 32.819 = $31 Mil.

Revenue was 358.211 + 422.998 + 478.357 + 591.687 = $1,851 Mil.
Gross Profit was 58.511 + 69.253 + 93.513 + 123.6 = $345 Mil.
Average Total Assets from the begining of last year (Oct12)
to the end of last year (Oct13) was
(1684.25 + 1580.31 + 1618.887 + 1664.126 + 1759.13) / 5 = $1661.3406 Mil.
Total Assets at the begining of last year (Oct12) was $1,684 Mil.
Long-Term Debt was $1,529 Mil.
Total Current Assets was $1,440 Mil.
Total Current Liabilities was $631 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 (TTM) was 307. ==> 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 (TTM) was -191. ==> 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 (TTM)/Total Assets at the Beginning of This Year (Oct13)
=307.144/1759.13
=0.17459994

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Oct12)
=31.295/1684.25
=0.01858097

Hovnanian Enterprises Inc's return on assets of this year was 0.17459994. Hovnanian Enterprises Inc's return on assets of last year was 0.01858097. ==> 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 (TTM) was 307. Hovnanian Enterprises Inc's current cash flow from operations (TTM) was -191. ==> -191 <= 307 ==> 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: Oct14)=Long-Term Debt/Average Total Assets from Oct13 to Oct14
=1657.557/1913.7744
=0.86611933

Gearing (Last Year: Oct13)=Long-Term Debt/Average Total Assets from Oct12 to Oct13
=1529.445/1661.3406
=0.92060893

Hovnanian Enterprises Inc's gearing of this year was 0.86611933. Hovnanian Enterprises Inc's gearing of last year was 0.92060893. ==> 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: Oct14)=Total Current Assets/Total Current Liabilities
=1635.53/717.95
=2.27805557

Current Ratio (Last Year: Oct13)=Total Current Assets/Total Current Liabilities
=1439.811/630.922
=2.28207449

Hovnanian Enterprises Inc's current ratio of this year was 2.27805557. Hovnanian Enterprises Inc's current ratio of last year was 2.28207449. ==> Last year's current ratio is higher ==> Score 0.

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 211.1. Hovnanian Enterprises Inc's number of shares in issue last year was 214.8. ==> 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: TTM)=Gross Profit/Revenue
=382.284/2063.38
=0.18527077

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=344.877/1851.253
=0.18629382

Hovnanian Enterprises Inc's gross margin of this year was 0.18527077. Hovnanian Enterprises Inc's gross margin of last year was 0.18629382. ==> Last year's gross margin is higher ==> Score 0.

Q9. 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 (Oct13)
=2063.38/1759.13
=1.17295481

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Oct12)
=1851.253/1684.25
=1.09915571

Hovnanian Enterprises Inc's asset turnover of this year was 1.17295481. Hovnanian Enterprises Inc's asset turnover of last year was 1.09915571. ==> 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+0+1+0+1
=5

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

Hovnanian Enterprises Inc has an F-score of 5 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

Oct05Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13Oct14
Q1 1100010011
Q2 0011010010
Q3 0000110111
Q4 0011111000
Q5 0000100011
Q6 1111001000
Q7 0110000000
Q8 1000011110
Q9 0000010111
F-score 3343363364

Hovnanian Enterprises Inc Quarterly Data

Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14
Q1 0000011111
Q2 0000010000
Q3 1111011111
Q4 0011100000
Q5 1000010011
Q6 0000101100
Q7 0000000111
Q8 1111111110
Q9 1111111111
F-score 4344465665
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