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Hovnanian Enterprises Inc. Message Board

  • truegrowthinvest31 truegrowthinvest31 Feb 16, 2012 12:02 PM Flag

    Proforma BV

    pro-forma book valuex after adding valuation allowance is more than $4/share or $400 million. time to sell was when this stock was $70 at peak of bubble. homes not over-priced now - long term value investors can accumulate on this ongoing uptrend from the base. AXL was similar cyclical stock in 09.

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    • I read they have a $900 million tax valuation allowance. So if i understand this correctly, the first $900 million in future taxes will not have to be paid. But in order to realize this, assuming a 40% tax rate, they need to earn $2.25 billion to realize the full benefit of this. Do i have this correct. So to say this has a present value of $900 million would be incorect. It could take 20 years to earn $2 billion if ever. I dont know what a fair present value of this asset would be. Maybe $200-$300 million?? Perhaps also you could say they have overwritten down assets that have potential to the tune of present value of $300 million. That would get equity back to around Zero. Not as bad as the negative $500 million on the books. Perhaps that is the secret sauce i've been missing. Making a bullish case is tough though for me. At least in the 4's. Maybe under $2.50 again. Hard to see HOV outperforming another well financed builder from these levels.

      Thanks for the info.

    • this has been a very good investment for me this year!

      • 1 Reply to truegrowthinvest31
      • Can you expand on your pro-forma book value calculations? I'm willing to listen to the bull case. The balance sheet says negative 540 million common equity including the preferred issue. $4/share positive book value would be over $500 million dollars. Or over $1 billion above what the balance sheet states. I could imagine it being $300 million plus another $200 million in present value of tax credits. But that would just get book value to zero.

        HOV has had some great appreciation in share price. But i'm calling it due to stock market trading dynamics rather than investing gains! Its money for you either way!!

    • <<pro-forma book valuex after adding valuation allowance is more than $4/share or $400 million>>

      I would love to see more color on that math. Did you include a $490m negative hole in the balance sheet thanks to 5 years of barfing out losses?

      • 1 Reply to LONG_36_80
      • check their investor relations page Review of Financial Results Third Quarter 2012 page 20 or Review of Financial Results Fourth Quarter 2011 page17, adding back valuation allowance adjusted BV is $4

        (1) Total Hovnanian Stockholders’ Deficit of $(404) million with $909 million valuation allowance added back to Stockholders’ Equity .

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