NVR Inc (NVR - Free Report) is a Zacks Rank #5 (Strong Sell) despite beating Wall Street estimates by $1.84 last week. How could a stock that posts such a big beat be the Bear of the Day? Let's find out why.
NVR, Inc. operates in two business segments: homebuilding and mortgage banking. The homebuilding unit sells and constructs homes under the Ryan Homes, NVHomes and Heartland Homes brands. As a corporate entity, NVR, Inc. provides various support functions for each of its sub-entities. These include sales and marketing support, vital human resource specialists, and an advanced information technology department, which provide a network of resources utilized by NVR, Inc. holdings. NVR Mortgage is headquartered in Reston, Virginia and operates branches in the metropolitan areas in which NVR has homebuilding operations. NVR Mortgage's primary focus is to serve the needs of NVR homebuyers. NVR Settlement Services, also headquartered in Reston, VA, provides a complete range of settlement and title services to support NVR's homebuilding operations.
I noted above the company beat the Wall Street Consensus, but it did even better against the Zacks Consensus Estimate. I see a reported EPS number of $49.05 and that is $2.84 better than the $46.21 estimate. That is a 6.15% positive earnings surprise.
The Zacks Rank is all about the movement in earnings estimates. When estimates move higher, the Rank follows. For NVR I see estimates for the current quarter moving lower.
Before the report the Zacks Consensus Estimate for the current quarter was at $51.95 but that has moved down to $47.64 following the print. Next quarter has the same reaction as the Zacks Consensus Estimate movd from $59.85 down to $53.76.
For the year 2018 the Zacks Consensus Estimate moved from $196 to $189.18.
Next year saw the Zacks Consensus Estimate slide from $219.21 to $203.50.
Those negative moves in the consensus estimate are the reason for the lower Zacks Rank.
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