Discounted Cash Flow (DCF) Analysis Levered

Hovnanian Enterprises, Inc. (HOV)

$99.19

-1.92 (-1.90%)

All numbers are in Millions, Currency in USD

Stock DCF: 2.59 | 99.19 | overvalue

Free Cash Flow

Year A/P	2018 Actual	2019 Actual	2020 Actual	2021 Actual	2022 Actual	2023 Projected	2024 Projected	2025 Projected	2026 Projected	2027 Projected
Revenue	1,991.23	2,016.92	2,343.90	2,782.86	2,922.23	3,223.50	3,555.82	3,922.41	4,326.79	4,772.85
Revenue (%)
Operating Cash Flow	-66.82	-249.13	292.83	210.21	89.47	47.71	52.63	58.06	64.04	70.65
Operating Cash Flow (%)
Capital Expenditure	-5.19	-4	-3.38	-5.94	-12.59	-8.05	-8.88	-9.79	-10.80	-11.91
Capital Expenditure (%)
Free Cash Flow	-72.01	-253.13	289.45	204.27	76.87	39.67	43.76	48.27	53.24	58.73

Weighted Average Cost Of Capital

Share price	$ 99.19
Beta	2.538
Diluted Shares Outstanding	6.73
Cost of Debt
Tax Rate	29.48
After-tax Cost of Debt	2.59%
Risk-Free Rate
Market Risk Premium
Cost of Equity	16.536
Total Debt	1,291.35
Total Equity	667.35
Total Capital	1,958.70
Debt Weighting	65.93
Equity Weighting	34.07
Wacc

Build Up Free Cash Flow

Year A/P	2018 Actual	2019 Actual	2020 Actual	2021 Actual	2022 Actual	2023 Projected	2024 Projected	2025 Projected	2026 Projected	2027 Projected
Revenue	1,991.23	2,016.92	2,343.90	2,782.86	2,922.23	3,223.50	3,555.82	3,922.41	4,326.79	4,772.85
Operating Cash Flow	-66.82	-249.13	292.83	210.21	89.47	47.71	52.63	58.06	64.04	70.65
Capital Expenditure	-5.19	-4	-3.38	-5.94	-12.59	-8.05	-8.88	-9.79	-10.80	-11.91
Free Cash Flow	-72.01	-253.13	289.45	204.27	76.87	39.67	43.76	48.27	53.24	58.73
WACC
PV LFCF						36.96	37.98	39.03	40.11	41.22
SUM PV LFCF										195.29

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%)	7.34
Free cash flow (t + 1)	59.91
Terminal Value	1,121.89
Present Value of Terminal Value	787.30

Intrinsic Value

Enterprise Value	982.59
Net Debt	965.15
Equity Value	17.43
Shares Outstanding	6.73
Equity Value Per Share	2.59