Flexsteel Industries (NASDAQ:FLXS) versus Hovnanian Enterprises (NYSE:HOV) Financial Review

Flexsteel Industries (NASDAQ:FLXS) and Hovnanian Enterprises (NYSE:HOV) are both small-cap consumer discretionary companies, but which is the better stock? We will compare the two companies based on the strength of their profitability, analyst recommendations, valuation, institutional ownership, dividends, earnings and risk.

Risk and Volatility

Flexsteel Industries has a beta of 0.57, suggesting that its share price is 43% less volatile than the S&P 500. Comparatively, Hovnanian Enterprises has a beta of 1.83, suggesting that its share price is 83% more volatile than the S&P 500.

Earnings and Valuation

This table compares Flexsteel Industries and Hovnanian Enterprises”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Flexsteel Industries	$459.18 million	0.93	$33.13 million	$6.21	12.83
Hovnanian Enterprises	$2.98 billion	0.23	$63.87 million	$0.95	120.57

Hovnanian Enterprises has higher revenue and earnings than Flexsteel Industries. Flexsteel Industries is trading at a lower price-to-earnings ratio than Hovnanian Enterprises, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

36.3% of Flexsteel Industries shares are owned by institutional investors. Comparatively, 65.4% of Hovnanian Enterprises shares are owned by institutional investors. 11.2% of Flexsteel Industries shares are owned by insiders. Comparatively, 22.7% of Hovnanian Enterprises shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of current ratings and target prices for Flexsteel Industries and Hovnanian Enterprises, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Flexsteel Industries	0	3	1	0	2.25
Hovnanian Enterprises	2	2	0	0	1.50

Flexsteel Industries currently has a consensus price target of $80.00, indicating a potential upside of 0.39%. Hovnanian Enterprises has a consensus price target of $74.00, indicating a potential downside of 35.39%. Given Flexsteel Industries’ stronger consensus rating and higher possible upside, research analysts clearly believe Flexsteel Industries is more favorable than Hovnanian Enterprises.

Profitability

This table compares Flexsteel Industries and Hovnanian Enterprises’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Flexsteel Industries	7.21%	16.11%	9.67%
Hovnanian Enterprises	0.64%	8.64%	2.17%

Summary

Flexsteel Industries beats Hovnanian Enterprises on 8 of the 14 factors compared between the two stocks.

About Flexsteel Industries

Flexsteel Industries, Inc., together with its subsidiaries, operates as a manufacturer, importer, and markets of upholstered furniture for residential and contract markets in the United States. It provides upholstered furniture, such as sofas, loveseats, chairs, reclining rocking chairs, swivel rockers, sofa beds, convertible bedding units, occasional tables, desks, dining tables and chairs, kitchen storage, bedroom furniture, and outdoor furniture. The company distributes its products through e-commerce channels and dealer sales force. It also engages in export related activities. Flexsteel Industries, Inc. was founded in 1893 and is based in Dubuque, Iowa.

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.