Analyzing Hovnanian Enterprises (NYSE:HOV) & Persimmon (OTCMKTS:PSMMY)

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

Profitability

This table compares Hovnanian Enterprises and Persimmon’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Hovnanian Enterprises	5.06%	23.31%	6.16%
Persimmon	N/A	N/A	N/A

Risk & Volatility

Hovnanian Enterprises has a beta of 2.12, meaning that its share price is 112% more volatile than the S&P 500. Comparatively, Persimmon has a beta of 1.28, meaning that its share price is 28% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Hovnanian Enterprises and Persimmon, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Hovnanian Enterprises	2	2	0	0	1.50
Persimmon	0	1	2	1	3.00

Hovnanian Enterprises presently has a consensus price target of $120.00, suggesting a potential upside of 0.15%. Given Hovnanian Enterprises’ higher possible upside, equities research analysts plainly believe Hovnanian Enterprises is more favorable than Persimmon.

Earnings and Valuation

This table compares Hovnanian Enterprises and Persimmon”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Hovnanian Enterprises	$3.00 billion	0.23	$242.01 million	$20.79	5.76
Persimmon	$4.09 billion	1.26	$341.33 million	N/A	N/A

Persimmon has higher revenue and earnings than Hovnanian Enterprises.

Institutional & Insider Ownership

65.4% of Hovnanian Enterprises shares are held by institutional investors. 19.8% of Hovnanian Enterprises shares are held by insiders. Comparatively, 0.6% of Persimmon shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Summary

Hovnanian Enterprises beats Persimmon on 7 of the 13 factors compared between the two stocks.

About Hovnanian Enterprises

Hovnanian Enterprises, Inc., through its subsidiaries, designs, constructs, markets, and sells residential homes in the United States. It offers single-family detached homes, attached townhomes and condominiums, urban infill, and active lifestyle homes with amenities, such as clubhouses, swimming pools, tennis courts, tot lots, and open areas. 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. It also provides mortgage loans, title insurance, and homeowner’s insurance services. The company was founded in 1959 and is headquartered in Matawan, New Jersey.

About Persimmon

Persimmon Plc, together with its subsidiaries, operates as a house builder in the United Kingdom. The company offers family housing under the Persimmon Homes brand name; housing under the Charles Church brand name; and social housing under the Westbury Partnerships brand name. It also provides broadband services under the FibreNest brand; and timber frame, insulated wall panels, and roof cassettes under the brand Space4. Further, it offers concrete bricks and roof tile. Persimmon Plc was founded in 1972 and is headquartered in York, the United Kingdom.