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NVR Shares Increase on Q3 Earnings Beat and Solid Orders

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NVR, Inc.’s (NVR - Free Report) shares gained almost 4% in the pre-market trading session, after it reported better-than-expected third-quarter 2020 results. Earnings beat the Zacks Consensus Estimate and also improved year over year, buoyed by solid housing market fundamentals in the United States, courtesy of low mortgage rates.

Inside the numbers

The company reported earnings of $65.11 per share, which topped the consensus mark of $62.01 by 5%. Also, the reported figure grew 16% from the prior-year figure of $56.11 per share.

Total revenues (Homebuilding & Mortgage Banking fees combined) amounted to $1.99 billion for the reported quarter. The figure increased 4% on a year-over-year basis, attributable to higher deliveries.

NVR, Inc. Price, Consensus and EPS Surprise

NVR, Inc. Price, Consensus and EPS Surprise

NVR, Inc. price-consensus-eps-surprise-chart | NVR, Inc. Quote

Segment Details

Homebuilding: Revenues in the segment totaled $1.92 billion, up 3% from the year-ago level. The metric, however, missed the consensus estimate by 4.2%. Settlements were up 1% year over year to 5,180 units.

Nonetheless, new orders increased a notable 40% from the prior year to 6,681 units. Average sales price of new orders also inched up 4% from the prior-year quarter to $384.200. Cancellation rate was 12% for the quarter, down from 16% in the year-ago period.

Quarter-end backlog — on a unit and dollar basis — was up 32% and 37% from the year-ago quarter to 12,124 units and $4.66 billion, respectively.

Gross margin improved 100 basis points to 20%.

Mortgage Banking: Mortgage banking fees increased 82.6% year over year to $69.3 million. Moreover, mortgage closed loan production totaled $1.38 billion, up 1% year over year.

Financials

At third quarter-end, NVR had cash and cash equivalents for Homebuilding and Mortgage Banking of $2.54 billion and $21.5 million compared with $1.11 billion and $29.4 million, respectively, at 2019-end.

Zacks Rank & Peer Releases

NVR — which share space with D.R. Horton, Inc. (DHI - Free Report) in the same industry — currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

KB Home (KBH - Free Report) reported third-quarter fiscal 2020 (ended Aug 31, 2020) results, wherein both earnings and revenues topped the respective Zacks Consensus Estimate on solid housing gross margin.

Lennar Corporation (LEN - Free Report) — currently carrying a Zacks Rank #1 — reported better-than-expected results for third-quarter fiscal 2020 (ended Aug 31, 2020). The quarterly results benefited from robust housing market fundamentals backed by low interest rates, and persistent undersupply of new as well as existing inventory. Also, solid execution of homebuilding and financial services businesses added to its bliss.

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