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NVR (NVR) Up 1.2% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for NVR (NVR - Free Report) . Shares have added about 1.2% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is NVR due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

NVR Q2 Earnings & Revenues Beat, Margin Up, Demand Solid

NVR, Inc. reported second-quarter 2021 results, wherein both earnings and homebuilding revenues surpassed the Zacks Consensus Estimate as well as improved significantly from the year-ago period.

The company has been witnessing strong demand for new homes. However, uncertainty regarding the extent and timing of disruption owing to the COVID-19 pandemic along with related governmental actions still persist. Also, uncertain effects of economic relief efforts on the U.S. economy, unemployment, consumer confidence, demand for homes, and the mortgage market may put pressure on future operational and financial performance.

Inside the numbers

The company reported earnings of $82.45 per share, which topped the consensus mark of $64.87 by 27.1%. Also, the reported figure increased 94% from the prior-year figure of $42.50 per share.

Total revenues (Homebuilding & Mortgage Banking fees combined) amounted to $2.28 billion for the reported quarter, reflecting an increase of 41% on a year-over-year basis backed by solid homebuilding revenues.

Segment Details

Homebuilding: Revenues in the segment totaled $2.22 billion, up 40% from the year-ago level. The metric also topped the consensus estimate of $2.05 billion by 8.3%.

However, new orders fell 6% from the prior year to 5,521 units. Average sales price of new orders, however, rose 20% from the prior-year quarter to $440,200. Cancellation rate was 8% for the quarter compared with 16% in the year-ago period. Settlements were up 32% year over year to 5,685 units.

Quarter-end backlog — on a unit and dollar basis — was up 19% and 35% from the year-ago quarter to 12,627 units and $5.41 billion, respectively.

Gross margin improved 340 basis points to 22.6%.

Mortgage Banking: Mortgage banking fees increased 86.8% year over year to $59 million. Moreover, mortgage closed loan production totaled $1.57 billion, up 37% year over year due to increased mortgage volume.

Financials

At the end of the reported quarter, NVR had cash and cash equivalents for Homebuilding and Mortgage Banking of $2.6 billion and $20.8 million compared with $2.7 billion and $63.5 million, respectively, at 2020-end.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month. The consensus estimate has shifted 5.4% due to these changes.

VGM Scores

At this time, NVR has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise NVR has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.


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