It has been about a month since the last earnings report for NVR (NVR Quick QuoteNVR - Free Report) . Shares have lost about 3.9% in that time frame, underperforming 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 catalysts.

NVR’s Q2 Earnings Beat, Homebuilding Revenues Miss, Margin Down

NVR 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.

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.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision.

The consensus estimate has shifted 10.98% due to these changes.

VGM Scores

At this time, NVR has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. 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.