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Why Is NVR (NVR) Down 3.9% Since Last Earnings Report?

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It has been about a month since the last earnings report for NVR (NVR - Free Report) . Shares have lost about 3.9% in that time frame, outperforming the S&P 500.

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

NVR's Q1 Earnings & Revenues Beat on Higher Prices

NVR, Inc.’s first-quarter 2022 earnings and revenues beat the respective the Zacks Consensus Estimate and increased year over year. Higher average price of settlements in the quarter and lower lumber prices led to the upside.

Inside the numbers

The company reported earnings of $116.56 per share, which topped the consensus mark of $100.47 by 16%. The reported figure increased 84% from the prior-year figure of $76.93 per share.

Total revenues (Homebuilding & Mortgage Banking fees combined) amounted to $2.38 billion for the reported quarter, reflecting growth of 17% on a year-over-year basis.

Segment Details

Homebuilding: Revenues in the segment totaled $2.31 billion, up 18% from the year-ago level. The metric also topped the consensus estimate of $2.28 billion by 1.5%. Settlements in the quarter were up 3% year over year to 5,214 units. The average selling price or ASP was $442,900, reflecting an increase of 14% year over year.

Gross margin improved 880 basis points to 28.5%, buoyed by higher ASP and lower lumber prices.

New orders were down 6% from the prior year to 5,927 units. The average sales price of new orders rose 13% from the prior-year quarter to $465,700. The cancellation rate was 10% for the quarter, in line with the year-ago period. Average active communities totaled 404, down from 445 reported for first-quarter 2021.

Quarter-end backlog on a unit basis increased 5% from the prior-year figure of 13,443 and 20% on a dollar basis to $6.23 billion.

Mortgage Banking: Mortgage banking fees decreased 11% year over year to $69.2 million. Mortgage closed loan production totaled $1.48 billion, up 5% year over year. The capture rate was 86% for the first quarter, down from 89% a year ago.

Financials

At first-quarter 2022-end, NVR had cash and cash equivalents for Homebuilding and Mortgage Banking of $2.14 billion and $19.2 million compared with $2.55 billion and $28.4 million, respectively, at 2021-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 30.91% due to these changes.

VGM Scores

At this time, NVR has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. 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 #2 (Buy). We expect an above average return from the stock in the next few months.


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