NVR, Inc.’s (NVR Quick QuoteNVR - Free Report) third-quarter 2021 earnings and revenues are expected to have increased on a year-over-year basis, courtesy of solid demand for new homes.

In the last-reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate by 27.1%. On a year-over-year basis, earnings increased 94%. NVR has a strong earnings surprise history, having surpassed analysts’ expectations in 13 of the trailing 14 quarters.

Trend in Estimate Revision

For the quarter to be reported, the Zacks Consensus Estimate for earnings per share has remained stable at $98.24 over the past 60 days. The estimated figure indicates an increase of 50.9% from the year-ago quarter. The consensus mark for revenues is pegged at $2.33 billion, suggesting a 21.5% increase from the year-ago reported figure of $1.92 billion.

Key Factors to Note

NVR’s quarterly results are likely to be impressive, given higher demand for homes. The company’s third-quarter Homebuilding revenues (accounting for 97.4% of total revenues) are expected to have increased from the year-ago level, backed by robust demand for new homes on lower mortgage rates and shortage of previously owned houses in the market. Also, the rising trend of working from home, owing to the coronavirus outbreak, has been 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. New home sales were up 6% and 1.5% year over year for July and August 2021 from their respective months of the previous year. Existing home sales were up 2.2% for July on a month-over-month basis. Although a rise in average home prices nationwide is a concern for the industry, builders have been witnessing higher demand, with Americans seeking more space for offices and classrooms.

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

Yet, escalating land, labor and material costs have been a threat to NVR. This is likely to have exerted some pressure on the company’s third-quarter margins as well.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for NVR for the quarter to be reported. The company does not 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: NVR carries a Zacks Rank #3.

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

Stocks With Favorable Combination

Here are some companies in the Zacks Construction sector, which according to our model have the right combination of elements to post an earnings beat in their respective quarters to be reported.

Jacobs Engineering Group Inc. (J Quick QuoteJ - Free Report) has an Earnings ESP of +6.49% and a Zacks Rank #2.

Meritage Homes Corporation (MTH Quick QuoteMTH - Free Report) has an Earnings ESP of +9.21% and holds a Zacks Rank #3.

Comfort Systems USA, Inc.  (FIX Quick QuoteFIX - Free Report) has an Earnings ESP of +6.34% and a Zacks Rank #3.