Discounted Cash Flow (DCF) Analysis Unlevered

Hovnanian Enterprises, Inc. (HOV)

$88.17

+3.07 (+3.61%)

All numbers are in Millions, Currency in USD

Stock DCF: 518.72 | 88.17 | undervalue

Operating Data

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 (%)
EBITDA	114.60	54.56	164.51	272.86	372.55	245.20	270.48	298.36	329.12	363.05
EBITDA (%)
EBIT	111.44	50.39	159.20	267.58	367.10	238.96	263.59	290.76	320.74	353.81
EBIT (%)
Depreciation	3.16	4.17	5.30	5.28	5.46	6.24	6.88	7.59	8.38	9.24
Depreciation (%)

Balance Sheet Data

Year A/P	2018 Actual	2019 Actual	2020 Actual	2021 Actual	2022 Actual	2023 Projected	2024 Projected	2025 Projected	2026 Projected	2027 Projected
Total Cash	187.87	130.98	262.49	245.97	326.20	303.84	335.16	369.72	407.83	449.88
Total Cash (%)
Account Receivables	35.19	44.91	33.69	39.93	37.84	52.61	58.04	64.02	70.62	77.90
Account Receivables (%)
Inventories	1,078.16	1,292.48	1,195.77	1,254.26	1,519.18	1,716.85	1,893.85	2,089.09	2,304.47	2,542.05
Inventories (%)
Accounts Payable	127.80	141.67	148.54	163.90	439.95	262.55	289.62	319.47	352.41	388.74
Accounts Payable (%)
Capital Expenditure	-5.19	-4	-3.38	-5.94	-12.59	-8.05	-8.88	-9.79	-10.80	-11.91
Capital Expenditure (%)

Weighted Average Cost Of Capital

Share price	$ 88.17
Beta	2.519
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	15.581
Total Debt	1,291.35
Total Equity	593.21
Total Capital	1,884.56
Debt Weighting	68.52
Equity Weighting	31.48
Wacc

Build Up Free Cash

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
EBITDA	114.60	54.56	164.51	272.86	372.55	245.20	270.48	298.36	329.12	363.05
EBIT	111.44	50.39	159.20	267.58	367.10	238.96	263.59	290.76	320.74	353.81
Tax Rate	44.51%	-6.17%	8.08%	-220.14%	29.48%	-28.85%	-28.85%	-28.85%	-28.85%	-28.85%
EBIAT	61.84	53.50	146.34	856.62	258.88	307.89	339.63	374.65	413.27	455.88
Depreciation	3.16	4.17	5.30	5.28	5.46	6.24	6.88	7.59	8.38	9.24
Accounts Receivable	-	-9.72	11.23	-6.25	2.10	-14.78	-5.42	-5.98	-6.60	-7.28
Inventories	-	-214.32	96.71	-58.49	-264.92	-197.67	-177	-195.25	-215.37	-237.58
Accounts Payable	-	13.87	6.87	15.36	276.05	-177.40	27.07	29.86	32.94	36.33
Capital Expenditure	-5.19	-4	-3.38	-5.94	-12.59	-8.05	-8.88	-9.79	-10.80	-11.91
UFCF	59.80	-156.51	263.08	806.58	264.97	-83.76	182.29	201.08	221.81	244.68
WACC
PV UFCF						-78.52	160.17	165.62	171.26	177.08
SUM PV UFCF										595.62

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%)	6.68
Free cash flow (t + 1)	249.57
Terminal Value	5,332.70
Present Value of Terminal Value	3,859.51

Intrinsic Value

Enterprise Value	4,455.12
Net Debt	965.15
Equity Value	3,489.97
Shares Outstanding	6.73
Equity Value Per Share	518.72