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NVR Q1 Earnings Beat Estimates, Gross Margin Improves Y/Y

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NVR, Inc. (NVR - Free Report) reported adjusted first-quarter 2018 earnings of $39.34 per share, beating the Zacks Consensus Estimate of $31.44 by 25.1%. Earnings increased 57% from the prior-year quarter, benefitting from lower federal statutory tax rate and a tax benefit related to homes settled in 2017.

Total revenues (Homebuilding & Mortgage Banking fees) were $1.5 billion in the quarter, increasing 20% from the prior-year quarter on account of higher housing revenues.

Segment Details

Homebuilding: In the reported quarter, homebuilding revenues rose 19% year over year to $1.5 billion.

New orders rose 17% to 5,174 homes, driven by demand growth in the housing markets served by NVR. Settlements increased 20% from the year-ago quarter to 4,630 units. Average sales price was $378,200, down 4% year over year due to a shift in new orders to lower priced ones and slashed product prices.

At the end of the reported quarter, average community count was 485 compared with 486 in the prior year quarter. The company’s backlog totaled 9,809 homes (as of Mar 31), up 22% from the prior-year quarter. Potential housing revenues from backlog increased 17% to $3.7 billion.

Margins

Homebuilding gross margin expanded 90 basis points (bps) to 18.7%.

Selling, general and administrative (SG&A) expenses were $105.5 million, more than 99.9 million in the prior-year quarter.

Mortgage Banking: In the quarter, Mortgage banking fees grew 33.2% year over year to $39.3 million. Mortgage totaled $1 billion in closed loan production, rising 20% year over year.

Financials

NVR’s cash and cash equivalents were $414.8 million as of Mar 31, compared with $645.1 million as of Dec 31, 2017.

NVR, Inc. Price, Consensus and EPS Surprise

 

Zacks Rank

NVR carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Peer Releases

Owens Corning (OC - Free Report) is slated to report quarterly results on Apr 25. The Zacks Consensus Estimate for earnings is pegged at 96 cents, reflecting an increase of 12.9% year over year.

Louisiana-Pacific (LPX - Free Report) is scheduled to release quarterly results on May 7. The Zacks Consensus Estimate for earnings stands at 67 cents, showing a rise of 103% year over year.

Installed Building Products (IBP - Free Report) is expected to report quarterly results on May 5. The Zacks Consensus Estimate for earnings is pegged at 46 cents, indicating a rise of 31.4% year over year.

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