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If You Invested $1000 in NVR 10 Years Ago, This Is How Much You'd Have Now

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For most investors, how much a stock's price changes over time is important. This factor can impact your investment portfolio as well as help you compare investment results across sectors and industries.

Another factor that can influence investors is FOMO, or the fear of missing out, especially with tech giants and popular consumer-facing stocks.

What if you'd invested in NVR (NVR - Free Report) ten years ago? It may not have been easy to hold on to NVR for all that time, but if you did, how much would your investment be worth today?

NVR's Business In-Depth

With that in mind, let's take a look at NVR's main business drivers.

Incorporated on Mar 4, 1993, NVR, Inc. is engaged in the construction and sale of single-family detached homes, townhomes and condominium buildings, all of which are primarily constructed on a pre-sold basis. In order to serve homebuilding customers, the company operates a mortgage banking and title services business. The company operates in two business segments:  Homebuilding and Mortgage Banking.

The homebuilding (accounting for 97.2% of 2021 total revenues) division builds and sells homes under three brand names - Ryan Homes, NVHomes and Heartland Homes. The company currently operates in 32 metropolitan areas across 14 states. The two trade names - NVHomes and Heartland Homes, are mainly for move-up and upscale buyers.

Established in 1980, NVHomes operates in Virginia, Maryland, Delaware, and Pennsylvania. Heartland Homes operates in the Pittsburgh, PA metropolitan area.

NVR’s homebuilding division comprises operating divisions in the following geographic areas: Mid Atlantic (Maryland, Virginia, West Virginia, Delaware and Washington, D.C.), North East (New Jersey and Eastern Pennsylvania), Mid East (New York, Ohio, Western Pennsylvania, Indiana and Illinois) and South East (North Carolina, South Carolina, Florida and Tennessee).

NVR derived approximately 27% and 11% of homebuilding revenues in 2019 from Washington, DC and Baltimore metropolitan areas, respectively.

NVR’s Mortgage Banking (2.8%) provides mortgage-related services to home-building customers through its mortgage banking operations. These services are operated primarily through a wholly owned subsidiary, NVR Mortgage Finance, Inc. (“NVRM”).

Bottom Line

While anyone can invest, building a lucrative investment portfolio takes research, patience, and a little bit of risk. If you had invested in NVR ten years ago, you're probably feeling pretty good about your investment today.

A $1000 investment made in May 2012 would be worth $5,865.89, or a 486.59% gain, as of May 5, 2022, according to our calculations. Investors should note that this return excludes dividends but includes price increases.

Compare this to the S&P 500's rally of 214.09% and gold's return of 10.24% over the same time frame.

Going forward, analysts are expecting more upside for NVR.

Shares of NVR have outperformed the industry so far this year. The trend is likely to continue given first-quarter 2022 results, with earnings and revenues beating their respective Zacks Consensus Estimate and increasing from the prior year’s levels. The higher average price of settlements in the quarter and lower lumber prices led to the upside. The company is benefiting from a solid housing market backdrop. Also, a disciplined business model and focus on maximizing liquidity and minimizing risks add to the positives. Gross margin improved a whopping 880 basis points, buoyed by higher ASP and lower lumber prices. However, industry-wide supply chain issues and inflationary pressure are pressing concerns. Also, lack of homes and municipal delays are likely to put pressure on upcoming results.

The stock is up 7.49% over the past four weeks, and no earnings estimate has gone lower in the past two months, compared to 2 higher, for fiscal 2022. The consensus estimate has moved up as well.

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