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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.

NYSE:HOV' s Piotroski F-Score Range Over the Past 10 Years
Min: 1   Max: 8
Current: 5

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 5.


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

* Premium members only.

Hovnanian Enterprises Inc Annual Data

Oct07 Oct08 Oct09 Oct10 Oct11 Oct12 Oct13 Oct14 Oct15 Oct16
Piotroski F-Score Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 3.00 6.00 6.00 3.00 5.00

Hovnanian Enterprises Inc Quarterly Data

Oct12 Jan13 Apr13 Jul13 Oct13 Jan14 Apr14 Jul14 Oct14 Jan15 Apr15 Jul15 Oct15 Jan16 Apr16 Jul16 Oct16 Jan17 Apr17 Jul17
Piotroski F-Score Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 4.00 5.00 7.00 6.00 5.00

Competitive Comparison
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap.

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 (Jul17) TTM:Last Year (Jul16) TTM:
Net Income was 22.289 + -0.143 + -6.682 + -337.209 = $-322 Mil.
Cash Flow from Operations was 193.109 + 25.916 + 91.302 + 28.234 = $339 Mil.
Revenue was 805.069 + 552.009 + 585.935 + 592.035 = $2,535 Mil.
Gross Profit was 112.06 + 78.621 + 80.845 + 80.714 = $352 Mil.
Average Total Assets from the begining of this year (Jul16)
to the end of this year (Jul17) was
(2388.841 + 2379.44 + 2145.296 + 2133.596 + 1822.319) / 5 = $2173.8984 Mil.
Total Assets at the begining of this year ({FiscalYear0}) was $2,389 Mil.
Long-Term Debt & Capital Lease Obligation was $1,651 Mil.
Total Current Assets was $1,469 Mil.
Total Current Liabilities was $552 Mil.
Total Assets was 25.519 + -16.173 + -8.461 + -0.474 = $0 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 last year (Jul15)
to the end of last year (Jul16) was
(2549.344 + 2602.298 + 2552.74 + 2518.627 + 2388.841) / 5 = $2522.37 Mil.
Total Assets at the begining of last year (Jul15) was $2,549 Mil.
Long-Term Debt & Capital Lease Obligation was $1,640 Mil.
Total Current Assets was $1,678 Mil.
Total Current Liabilities was $870 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 {NetIncome0_f}. ==> Negative ==> Score 0.

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 339. ==> 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/Total Assets(Jul16)
=-321.745/2388.841
=-0.13468665

ROA (Last Year)=Net Income/Total Assets(Jul15)
=0.411/2549.344
=0.00016122

Hovnanian Enterprises Inc's return on assets of this year was -0.13468665. Hovnanian Enterprises Inc's return on assets of last year was 0.00016122. ==> 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 -322. Hovnanian Enterprises Inc's current Cash Flow from Operations (TTM) was 339. ==> 339 > -322 ==> 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: Jul17)=Long-Term Debt & Capital Lease Obligation/Total Assetsfrom Jul16 to Jul17
=1650.543/2173.8984
=0.75925489

Gearing (Last Year: Jul16)=Long-Term Debt & Capital Lease Obligation/Total Assetsfrom Jul15 to Jul16
=1640.255/2522.37
=0.65028327

Hovnanian Enterprises Inc's gearing of this year was 0.75925489. Hovnanian Enterprises Inc's gearing of last year was 0.65028327. ==> Last year is lower than this year ==> Score 0.

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: Jul17)=Total Current Assets/Total Current Liabilities
=1469.29/551.573
=2.66381784

Current Ratio (Last Year: Jul16)=Total Current Assets/Total Current Liabilities
=1677.958/870.05
=1.92857652

Hovnanian Enterprises Inc's current ratio of this year was 2.66381784. Hovnanian Enterprises Inc's current ratio of last year was 1.92857652. ==> This year's current ratio is higher. ==> Score 1.

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 147.7. Hovnanian Enterprises Inc's number of shares in issue last year was 147.4. ==> 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
=352.24/2535.048
=0.13894806

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=354.296/2640.382
=0.13418361

Hovnanian Enterprises Inc's gross margin of this year was 0.13894806. Hovnanian Enterprises Inc's gross margin of last year was 0.13418361. ==> This year's gross margin is higher. ==> Score 1.

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/Total Assets at the Beginning of This Year (Jul16)
=2535.048/2388.841
=1.06120416

Asset Turnover (Last Year)=Revenue/Total Assets at the Beginning of Last Year (Jul15)
=2640.382/2549.344
=1.03571036

Hovnanian Enterprises Inc's asset turnover of this year was 1.06120416. Hovnanian Enterprises Inc's asset turnover of last year was 1.03571036. ==> This year's asset turnover is higher. ==> Score 1.

Evaluation

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


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