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NVR Q2 Earnings Beat, Homebuilding Revenues Miss, Margin Down
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NVR, Inc. (NVR - Free Report) reported second-quarter 2023 results, wherein its earnings surpassed the Zacks Consensus Estimate but Homebuilding revenues missed the same. The top and bottom lines declined on a year-over-year basis, thanks to delayed housing activities and macroeconomic woes.
Shares of this leading homebuilder increased 2.09% on Jul 25 after the earnings release.
Inside the Numbers
The company reported earnings of $116.54 per share, which topped the consensus mark of $100.98 by 15.4%. The reported figure, however, decreased by 6% from the prior-year quarter’s figure of $123.65 per share.
Total revenues (Homebuilding & Mortgage Banking fees combined) amounted to $2.34 billion for the reported quarter, reflecting a decline of 12% on a year-over-year basis.
Segment Details
Homebuilding: Revenues in the segment totaled $2.28 billion, down 12.5% from the year-ago quarter. The metric lagged the consensus estimate of $2.38 billion by 3.9%. Settlements in the quarter were down 13% year over year to 5,085 units. The average selling price or ASP was $449,000, flat year over year.
Gross margin contracted 200 basis points to 24.3%, buoyed by lower ASP.
New orders, net of cancellations, rose 27% from the prior-year quarter’s levels to 5,905 units. The average sales price of new orders fell 5% from the prior-year quarter’s figure to $447,300. The cancellation rate was 10.9% for the quarter, down from 14.3% a year ago.
The quarter-end backlog, on a unit basis, declined 9% from the prior-year quarter’s figure of 11,231 homes and fell 12% on a dollar basis to $5.15 billion.
Average active communities were 426 during the quarter versus 406 reported a year ago.
Mortgage Banking: Mortgage banking fees grew 11.6% year over year to $54.6 million. Mortgage closed loan production totaled $1.38 billion, down 16% year over year. The capture rate was 86% for the second quarter, up from 84% a year ago.
Financials
At the second-quarter end, NVR had cash and cash equivalents for Homebuilding and Mortgage Banking of $2.68 billion and $13.9 million, respectively compared with $2.5 billion and $19.4 million, respectively, at 2022-end.
During the second quarter, NVR repurchased 34,827 shares for $201 million. At June-end, the company had 3,260,538 shares outstanding.
PulteGroup Inc. (PHM - Free Report) reported impressive results in second-quarter 2023. Its earnings and revenues surpassed their respective Zacks Consensus Estimates and increased year over year. The upside was mainly driven by its solid operating model, which strategically aligns the production of build-to-order and quick-move-in homes with applicable demand across consumer groups.
Backed by its disciplined and balanced business model, the company witnessed solid gross closings, orders and margins in the reported quarter and posted a 12-month return on equity of 32%.
D.R. Horton, Inc. (DHI - Free Report) reported third-quarter fiscal 2023 (ended Jun 30, 2023) results, wherein earnings and revenues surpassed their respective Zacks Consensus Estimate.
On a year-over-year basis, although earnings declined, revenues increased. The company highlighted that the supply of both new and existing homes at affordable price points remains limited and that the demographics supporting housing demand remain favorable. This tailwind has helped this Arlington, TX-based homebuilder witness net sales order growth of 37% year over year in the fiscal third quarter.
KB Home (KBH - Free Report) reported better-than-expected results for second-quarter fiscal 2023 (ended May 31, 2023). Both earnings and revenues beat the Zacks Consensus Estimate. The company’s earnings and revenues surpassed the consensus mark in two consecutive quarters.
KBH’s net orders grew 1% in the quarter to 3,936 units from the prior year. The value of net orders, however, was down 11% from the year-ago quarter to $1.9 billion due to lower ASP. Sequentially, net orders grew 84% in units and 90% in value, respectively.
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NVR Q2 Earnings Beat, Homebuilding Revenues Miss, Margin Down
NVR, Inc. (NVR - Free Report) reported second-quarter 2023 results, wherein its earnings surpassed the Zacks Consensus Estimate but Homebuilding revenues missed the same. The top and bottom lines declined on a year-over-year basis, thanks to delayed housing activities and macroeconomic woes.
Shares of this leading homebuilder increased 2.09% on Jul 25 after the earnings release.
Inside the Numbers
The company reported earnings of $116.54 per share, which topped the consensus mark of $100.98 by 15.4%. The reported figure, however, decreased by 6% from the prior-year quarter’s figure of $123.65 per share.
NVR, Inc. Price, Consensus and EPS Surprise
NVR, Inc. price-consensus-eps-surprise-chart | NVR, Inc. Quote
Total revenues (Homebuilding & Mortgage Banking fees combined) amounted to $2.34 billion for the reported quarter, reflecting a decline of 12% on a year-over-year basis.
Segment Details
Homebuilding: Revenues in the segment totaled $2.28 billion, down 12.5% from the year-ago quarter. The metric lagged the consensus estimate of $2.38 billion by 3.9%. Settlements in the quarter were down 13% year over year to 5,085 units. The average selling price or ASP was $449,000, flat year over year.
Gross margin contracted 200 basis points to 24.3%, buoyed by lower ASP.
New orders, net of cancellations, rose 27% from the prior-year quarter’s levels to 5,905 units. The average sales price of new orders fell 5% from the prior-year quarter’s figure to $447,300. The cancellation rate was 10.9% for the quarter, down from 14.3% a year ago.
The quarter-end backlog, on a unit basis, declined 9% from the prior-year quarter’s figure of 11,231 homes and fell 12% on a dollar basis to $5.15 billion.
Average active communities were 426 during the quarter versus 406 reported a year ago.
Mortgage Banking: Mortgage banking fees grew 11.6% year over year to $54.6 million. Mortgage closed loan production totaled $1.38 billion, down 16% year over year. The capture rate was 86% for the second quarter, up from 84% a year ago.
Financials
At the second-quarter end, NVR had cash and cash equivalents for Homebuilding and Mortgage Banking of $2.68 billion and $13.9 million, respectively compared with $2.5 billion and $19.4 million, respectively, at 2022-end.
During the second quarter, NVR repurchased 34,827 shares for $201 million. At June-end, the company had 3,260,538 shares outstanding.
Zacks Rank & Peer Releases
NVR currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
PulteGroup Inc. (PHM - Free Report) reported impressive results in second-quarter 2023. Its earnings and revenues surpassed their respective Zacks Consensus Estimates and increased year over year. The upside was mainly driven by its solid operating model, which strategically aligns the production of build-to-order and quick-move-in homes with applicable demand across consumer groups.
Backed by its disciplined and balanced business model, the company witnessed solid gross closings, orders and margins in the reported quarter and posted a 12-month return on equity of 32%.
D.R. Horton, Inc. (DHI - Free Report) reported third-quarter fiscal 2023 (ended Jun 30, 2023) results, wherein earnings and revenues surpassed their respective Zacks Consensus Estimate.
On a year-over-year basis, although earnings declined, revenues increased. The company highlighted that the supply of both new and existing homes at affordable price points remains limited and that the demographics supporting housing demand remain favorable. This tailwind has helped this Arlington, TX-based homebuilder witness net sales order growth of 37% year over year in the fiscal third quarter.
KB Home (KBH - Free Report) reported better-than-expected results for second-quarter fiscal 2023 (ended May 31, 2023). Both earnings and revenues beat the Zacks Consensus Estimate. The company’s earnings and revenues surpassed the consensus mark in two consecutive quarters.
KBH’s net orders grew 1% in the quarter to 3,936 units from the prior year. The value of net orders, however, was down 11% from the year-ago quarter to $1.9 billion due to lower ASP. Sequentially, net orders grew 84% in units and 90% in value, respectively.