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NVR to Report Q4 Earnings: What's in Store for the Stock?

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NVR, Inc.’s (NVR - Free Report) fourth-quarter 2020 earnings and revenues are expected to have witnessed growth on a year-over-year basis.

In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate by 5%. On a year-over-year basis, earnings increased 16%.

Nonetheless, the company has a strong earnings surprise history, having surpassed analysts’ expectations in 13 of the trailing 15 quarters.

Trend in Estimate Revision

For the quarter to be reported, the Zacks Consensus Estimate for earnings per share has remained unchanged over the past 60 days at $76.52. The estimated figure indicates an increase of 18.8% from the year-ago quarter. The consensus mark for revenues is pegged at $2.18 billion, suggesting an 11.8% increase from the year-ago reported figure of $1.95 billion.

NVR, Inc. Price and EPS Surprise

 

NVR, Inc. Price and EPS Surprise

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

Key Factors to Note

NVR’s fourth-quarter Homebuilding revenues (accounting for 97.7% of total revenues) are expected to have increased from the year-ago level, backed by robust demand for new homes on lower mortgage rates. Also, the rising trend of working from home owing to the coronavirus outbreak is prompting many families to choose to live in lower-cost and low-density communities, thereby boosting demand.

The improved sales trends can be attributed to solid monthly housing sales data. Notably, pending home sales, new home sales and existing home sales were up 16.4%, 20.8% and 25.8 % on year-over-year basis in November but declined 2.6%, 11% and 2.5% from October, respectively. Moreover, solid fundamentals in the U.S. housing industry have been a key factor for NVR and other homebuilding stocks like D.R. Horton, Inc. (DHI - Free Report) , KB Home (KBH - Free Report) , Lennar Corporation (LEN - Free Report) .

Also, for NVR, more demand for affordable housing from multiple demographic groups is likely to have given a boost to orders in the fourth quarter.

However, escalating land and labor costs have been a threat for NVR. This is likely to exert pressure on the company’s fourth-quarter margins as well.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for NVR in the quarter to be reported. It doesn’t have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — to increase the odds of an earnings beat.

Earnings ESP: The company has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Currently, NVR carries a Zacks Rank #3.

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

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