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NVR is Set to Report Q3 Earnings: What's in the Cards?
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NVR, Inc.’s (NVR - Free Report) third-quarter 2023 earnings and homebuilding revenues are expected to have declined on a year-over-year basis. The downside is quite likely to have been driven by high mortgage rates, dwindled average sales price of new orders and the ongoing macroeconomic risks.
In the last reported quarter, earnings topped the Zacks Consensus Estimate by 15.4% while the homebuilding revenues missed the same by 3.9%. On a year-over-year basis, earnings and homebuilding revenues decreased 6% and 12.5%, respectively.
The company’s earnings topped analysts’ expectations in 16 of the trailing 21 quarters.
Trend in Estimate Revision
For the quarter to be reported, the Zacks Consensus Estimate for earnings per share (EPS) has declined to $112.79 from $113.01 over the past seven days. The estimated figure indicates a 4.8% decline from the year-ago quarter’s reported earnings figure of $118.51 per share.
The consensus mark for homebuilding revenues is pegged at $2.59 billion, suggesting a 5.5% decline from the year-ago reported figure of $2.74 billion.
Key Factors to Consider
NVR’s homebuilding revenues (accounted for 97.4% of total revenues in second-quarter 2023) are expected to have declined on a year-over-year basis in the third quarter due to the decline in settlements amid rising mortgage rates. Also, declining backlog has reduced its growth prospects.
Although the company’s homebuilding revenues are likely to have witnessed tough year-over-year comparisons, NVR is expected to generate sequentially higher revenues, given the lack of existing homes inventory. Furthermore, the company’s acquisition strategy accompanied by reduced cancellation rates are likely to help it to partially offset the negative impacts of the aforementioned headwinds.
For the quarter, our model predicts the average selling price of settlements to decline 1.6% year over year to $452,900. Also, we anticipate total settlements to decline 6.6% to 5,559 units on a year-over-year basis.
The ongoing macroeconomic uncertainties, inflationary pressures and high interest rates have been adversely impacting the housing demand.
Meanwhile, the bottom line of NVR is quite likely to be affected by material cost inflation and rising wages. We expect the homebuilding selling, general and administrative expenses to increase 24.4% year over year. Also, we expect income before tax (homebuilding segment) to decline 10.5% year over year to $466 million.
Owing to the aforementioned economic uncertainties, for third-quarter 2023, we expect total backlog value to decline 1.2% to $5.02 billion year over year.
What our Model Unveils
Our proven model does not conclusively predict an earnings beat for NVR this time around. The company does not have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — to increase the odds of an earnings beat.
Earnings ESP: The company has an Earnings ESP of -5.20%. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Zacks Rank: NVR currently carries a Zacks Rank of 3.
Stocks Poised to Beat on Earnings
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 the quarter to be reported.
KBR’s earnings for the to-be-reported quarter are expected to increase 12.3%. Notably, the company reported better-than-expected earnings in the trailing four quarters, the average surprise being 10.8%.
Louisiana-Pacific Corporation (LPX - Free Report) has an Earnings ESP of +2.07% and a Zacks Rank of 3.
LPX is expected to register 19.2% decline in earnings for the to-be-reported quarter. The company reported better-than-expected earnings in three of the trailing four quarters and missed on the remaining occasion, the average surprise being 95.8%.
Vulcan Materials Company (VMC - Free Report) has an Earnings ESP of +1.82% and a Zacks Rank of 2.
VMC’s earnings for the to-be-reported quarter are expected to increase 23.6%. The company reported better-than-expected earnings in three of the trailing four quarters and missed on the other one occasion, the average surprise being 14%.
Image: Bigstock
NVR is Set to Report Q3 Earnings: What's in the Cards?
NVR, Inc.’s (NVR - Free Report) third-quarter 2023 earnings and homebuilding revenues are expected to have declined on a year-over-year basis. The downside is quite likely to have been driven by high mortgage rates, dwindled average sales price of new orders and the ongoing macroeconomic risks.
In the last reported quarter, earnings topped the Zacks Consensus Estimate by 15.4% while the homebuilding revenues missed the same by 3.9%. On a year-over-year basis, earnings and homebuilding revenues decreased 6% and 12.5%, respectively.
The company’s earnings topped analysts’ expectations in 16 of the trailing 21 quarters.
Trend in Estimate Revision
For the quarter to be reported, the Zacks Consensus Estimate for earnings per share (EPS) has declined to $112.79 from $113.01 over the past seven days. The estimated figure indicates a 4.8% decline from the year-ago quarter’s reported earnings figure of $118.51 per share.
NVR, Inc. Price and EPS Surprise
NVR, Inc. price-eps-surprise | NVR, Inc. Quote
The consensus mark for homebuilding revenues is pegged at $2.59 billion, suggesting a 5.5% decline from the year-ago reported figure of $2.74 billion.
Key Factors to Consider
NVR’s homebuilding revenues (accounted for 97.4% of total revenues in second-quarter 2023) are expected to have declined on a year-over-year basis in the third quarter due to the decline in settlements amid rising mortgage rates. Also, declining backlog has reduced its growth prospects.
Although the company’s homebuilding revenues are likely to have witnessed tough year-over-year comparisons, NVR is expected to generate sequentially higher revenues, given the lack of existing homes inventory. Furthermore, the company’s acquisition strategy accompanied by reduced cancellation rates are likely to help it to partially offset the negative impacts of the aforementioned headwinds.
For the quarter, our model predicts the average selling price of settlements to decline 1.6% year over year to $452,900. Also, we anticipate total settlements to decline 6.6% to 5,559 units on a year-over-year basis.
The ongoing macroeconomic uncertainties, inflationary pressures and high interest rates have been adversely impacting the housing demand.
Meanwhile, the bottom line of NVR is quite likely to be affected by material cost inflation and rising wages. We expect the homebuilding selling, general and administrative expenses to increase 24.4% year over year. Also, we expect income before tax (homebuilding segment) to decline 10.5% year over year to $466 million.
Owing to the aforementioned economic uncertainties, for third-quarter 2023, we expect total backlog value to decline 1.2% to $5.02 billion year over year.
What our Model Unveils
Our proven model does not conclusively predict an earnings beat for NVR this time around. The company does not have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — to increase the odds of an earnings beat.
Earnings ESP: The company has an Earnings ESP of -5.20%. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Zacks Rank: NVR currently carries a Zacks Rank of 3.
Stocks Poised to Beat on Earnings
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 the quarter to be reported.
KBR, Inc. (KBR - Free Report) has an Earnings ESP of +6.36% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
KBR’s earnings for the to-be-reported quarter are expected to increase 12.3%. Notably, the company reported better-than-expected earnings in the trailing four quarters, the average surprise being 10.8%.
Louisiana-Pacific Corporation (LPX - Free Report) has an Earnings ESP of +2.07% and a Zacks Rank of 3.
LPX is expected to register 19.2% decline in earnings for the to-be-reported quarter. The company reported better-than-expected earnings in three of the trailing four quarters and missed on the remaining occasion, the average surprise being 95.8%.
Vulcan Materials Company (VMC - Free Report) has an Earnings ESP of +1.82% and a Zacks Rank of 2.
VMC’s earnings for the to-be-reported quarter are expected to increase 23.6%. The company reported better-than-expected earnings in three of the trailing four quarters and missed on the other one occasion, the average surprise being 14%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.