Comparing Universal Electronics (NASDAQ:UEIC) & Hovnanian Enterprises (NYSE:HOV)

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

Volatility and Risk

Hovnanian Enterprises has a beta of 1.83, indicating that its stock price is 83% more volatile than the S&P 500. Comparatively, Universal Electronics has a beta of 1.18, indicating that its stock price is 18% more volatile than the S&P 500.

Earnings and Valuation

This table compares Hovnanian Enterprises and Universal Electronics”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Hovnanian Enterprises	$2.98 billion	0.23	$63.87 million	$0.95	125.25
Universal Electronics	$368.29 million	0.16	-$18.60 million	($1.16)	-4.02

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

Profitability

This table compares Hovnanian Enterprises and Universal Electronics’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Hovnanian Enterprises	0.64%	8.64%	2.17%
Universal Electronics	-4.57%	2.70%	1.44%

Insider and Institutional Ownership

65.4% of Hovnanian Enterprises shares are owned by institutional investors. Comparatively, 79.3% of Universal Electronics shares are owned by institutional investors. 22.7% of Hovnanian Enterprises shares are owned by company insiders. Comparatively, 17.1% of Universal Electronics shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current recommendations for Hovnanian Enterprises and Universal Electronics, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Hovnanian Enterprises	2	2	0	0	1.50
Universal Electronics	1	2	0	0	1.67

Hovnanian Enterprises currently has a consensus target price of $74.00, suggesting a potential downside of 37.81%. Universal Electronics has a consensus target price of $4.25, suggesting a potential downside of 8.92%. Given Universal Electronics’ stronger consensus rating and higher probable upside, analysts clearly believe Universal Electronics is more favorable than Hovnanian Enterprises.

Summary

Hovnanian Enterprises beats Universal Electronics on 10 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 Universal Electronics

Universal Electronics Inc. designs, develops, manufactures, ships, and supports control and sensor technology solutions in the United States, the People’s Republic of China, rest of Asia, Europe, Latin America, and internationally. The company offers voice-enabled automatically-programmed universal two-way radio frequency, as well as infrared remote controls to video service providers, original equipment manufacturers (OEMs), retailers, and private label customers; wall-mount and handheld thermostat controllers and connected accessories for smart energy management systems to OEM customers, hotels, hospitality, and system integrators; proprietary and standards-based RF sensors for residential security, safety, and home automation applications; and integrated circuits on which its software and universal device control database is embedded to OEMs, video service providers, and private label customers. It also provides software, firmware and technology solutions that can enable devices such as Smart TVs, hybrid set-top boxes, audio systems, smart speakers, game consoles, and other consumer electronic and smart home devices to wirelessly connect and interoperate within home networks; cloud-services that support its embedded software and hardware solutions; intellectual property that the company licenses to OEMs and video service providers; embedded and cloud-enabled software for firmware update provisioning and digital rights management validation services to consumer electronics brands; and AV accessories, including universal remote controls, television wall mounts and stands, and digital television antennas. In addition, the company QuickSet, a software application that can be embedded in entertainment or smart home platform or can be delivered as a cloud-based service, through QuickSet Cloud, to enable universal device setup, interoperability, and control. Universal Electronics Inc. was incorporated in 1986 and is based in Scottsdale, Arizona.