Comparing Hovnanian Enterprises (HOV) and Lennar Corporation (LEN)

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

Insider and Institutional Ownership

29.8% of Hovnanian Enterprises shares are held by institutional investors. Comparatively, 81.8% of Lennar Corporation shares are held by institutional investors. 15.4% of Hovnanian Enterprises shares are held by company insiders. Comparatively, 12.2% of Lennar Corporation shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Dividends

Lennar Corporation pays an annual dividend of $0.16 per share and has a dividend yield of 0.3%. Hovnanian Enterprises does not pay a dividend. Lennar Corporation pays out 4.7% of its earnings in the form of a dividend.

Profitability

This table compares Hovnanian Enterprises and Lennar Corporation’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%
Lennar Corporation 6.78% 12.57% 5.69%

Risk & Volatility

Hovnanian Enterprises has a beta of 1.69, suggesting that its share price is 69% more volatile than the S&P 500. Comparatively, Lennar Corporation has a beta of 1.26, suggesting that its share price is 26% more volatile than the S&P 500.

Earnings & Valuation

This table compares Hovnanian Enterprises and Lennar Corporation’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Hovnanian Enterprises $2.66 billion 0.11 $137.91 million $0.09 24.11
Lennar Corporation $11.81 billion 0.93 $1.36 billion $3.42 15.82

Lennar Corporation has higher revenue and earnings than Hovnanian Enterprises. Lennar Corporation 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 current recommendations for Hovnanian Enterprises and Lennar Corporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Hovnanian Enterprises 1 1 0 0 1.50
Lennar Corporation 0 8 9 1 2.61

Hovnanian Enterprises presently has a consensus target price of $1.55, suggesting a potential downside of 28.57%. Lennar Corporation has a consensus target price of $56.31, suggesting a potential upside of 4.11%. Given Lennar Corporation’s stronger consensus rating and higher possible upside, analysts plainly believe Lennar Corporation is more favorable than Hovnanian Enterprises.

Summary

Lennar Corporation beats Hovnanian Enterprises on 13 of the 17 factors compared between the two stocks.

About Hovnanian Enterprises

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.

About Lennar Corporation

Lennar Corporation is a provider of real estate related financial services, commercial real estate, investment management and finance company. The Company is a homebuilder that operates in various states. Its segments include Homebuilding East, Homebuilding Central, Homebuilding West, Lennar Financial Services, Rialto and Lennar Multifamily. It is a developer of multifamily rental properties. Its Homebuilding operations include the construction and sale of single-family attached and detached homes, as well as the purchase, development and sale of residential land. It operates primarily under the Lennar brand name. The Lennar Financial Services segment includes mortgage financing, title insurance and closing services for both buyers of its homes and others. The Rialto segment is a real estate, investment management, and finance company. The Lennar Multifamily segment focuses on developing a portfolio of institutional multifamily rental properties in the United States markets.

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