Based on the aggregated intelligence of 160,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, homebuilder Hovnanian Enterprises (NYSE: HOV) has received the dreaded one-star ranking.

With that in mind, let's take a closer look at Hovnanian's business, and see what CAPS investors are saying about the stock right now.

Hovnanian facts

Headquarters (Founded)

Red Bank, N.J. (1959)

Market Cap

$473.7 million



Trailing-12-Month Revenue

$1.5 billion


CEO Ara Hovnanian (since 1997)
CFO Larry Sorsby (since 1996)

Return on Capital (Average, Past 3 Years)


Compound Annual Revenue Growth (Over Past 3 Years)



$328.3 million / $1.8 billion

1-Year Return



DR Horton (NYSE: DHI)
Lennar (NYSE: LEN)

Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.

On CAPS, 58% of the 1,042 members who have rated Hovnanian believe the stock will underperform the S&P 500 going forward. These bears include Beorn10 and All-Star UltraLong, who is ranked in the top 0.05% of our community.

Just last week, Beorn10 tried to explain the recent run in housing stocks: "Speculation that home builders have been down so long that they must be a value buy at this point. They may be right and I may be wrong. Show me the buyers with real money and real jobs and I'll change my mind."

In a pitch from two days later, UltraLong builds on that bearishness:

Hovnanian is a brutally bad homebuilder that makes little financial sense to own. They turned a very large positive book value into a very large negative book value in the past two years. They made some very poor land decisions over the latter half of the decade and now have more homes than they can sell. Inventories remain high and 1.5 billion in net long-term debts are going to cripple them. No more tax benefits to create pseudo-profits so losses should continue into 2013-2014. Probably the worst company in this sector and the one showing the biggest move higher.

What do you think about Hovnanian, or any other stock for that matter? If you want to retire rich, you need to protect your portfolio from any undue risk. Staying away from dangerous stocks is crucial to securing your financial future, and on Motley Fool CAPS, thousands of investors are working every day to flag them. CAPS is 100% free, so get started!

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Fool's disclosure policy always gets a perfect score.