Yahoo Finance What Does Hovnanian Enterprises Inc’s (NYSE:HOV) Share Price Indicate?
Hovnanian Enterprises Inc (NYSE:HOV), which is in the consumer durables business, and is based in United States, saw significant share price volatility over the past couple of months on the NYSE, rising to the highs of $1.71 and falling to the lows of $1.25. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether Hovnanian Enterprises’s current trading price of $1.3 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Hovnanian Enterprises’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
View our latest analysis for Hovnanian Enterprises
What’s the opportunity in Hovnanian Enterprises?
Great news for investors – Hovnanian Enterprises is still trading at a fairly cheap price. My valuation model shows that the intrinsic value for the stock is $2.34, but it is currently trading at US$1.30 on the share market, meaning that there is still an opportunity to buy now. Although, there may be another chance to buy again in the future. This is because Hovnanian Enterprises’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
Can we expect growth from Hovnanian Enterprises?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. However, with an expected decline of -3.0% in revenues over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Hovnanian Enterprises. This certainty tips the risk-return scale towards higher risk.
What this means for you:
Are you a shareholder? Although HOV is currently undervalued, the adverse prospect of negative growth brings about some degree of risk. Consider whether you want to increase your portfolio exposure to HOV, or whether diversifying into another stock may be a better move for your total risk and return.
Are you a potential investor? If you’ve been keeping tabs on HOV for some time, but hesitant on making the leap, I recommend you research further into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Hovnanian Enterprises. You can find everything you need to know about Hovnanian Enterprises in the latest infographic research report. If you are no longer interested in Hovnanian Enterprises, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
