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NVR Q4 Earnings Beat, Homebuilding Revenues Lag, Orders Up 25%

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NVR, Inc. (NVR - Free Report) reported mixed fourth-quarter 2023 results, with earnings surpassing the Zacks Consensus Estimate and Homebuilding revenues missing the same. Both the top and bottom lines decreased on a year-over-year basis due to softened housing demand, given higher mortgage rates during the period.

Shares of this leading homebuilder inched up 0.2% during the trading session on Jan 30, 2024.

Inside the Numbers

The company reported earnings of $121.56 per share, which topped the consensus mark of $118.63 by 2.9%. The reported figure decreased 9% from the prior-year quarter’s figure of $133.44 per share.
Total revenues (Homebuilding & Mortgage Banking fees combined) amounted to $2.43 billion for the reported quarter, reflecting a decline of 10% on a year-over-year basis.

NVR, Inc. Price, Consensus and EPS Surprise

NVR, Inc. Price, Consensus and EPS Surprise

NVR, Inc. price-consensus-eps-surprise-chart | NVR, Inc. Quote

Segment Details

Homebuilding: Revenues in the segment totaled $2.39 billion, down 11% from the year-ago quarter. The metric lagged the consensus estimate of $2.57 billion by 7.2%. Settlements in the quarter were down 7% year over year to 5,332 units. Our model predicted settlements to decline 0.2% year over year to 5,739 units. The average selling price, or ASP, was $447,600, down 4% year over year. Our estimate for the metric was $449,900.

Gross margin contracted 120 basis points year over year to 24.1%. Our estimate for the metric was 24.2%.

Given declining rates, new orders, net of cancelations, increased 25% from the prior-year quarter’s levels to 5,190 units. The average sales price of new orders dropped 2% from the prior-year quarter’s figure to $450,900. However, our model predicted the average sales price of new orders to decline 0.4% year over year to $457,200. The cancelation rate was 13% for the quarter, down from 18% a year ago.

On a unit basis, backlog at the end of Dec 31, 2023, improved 12% from the prior-year quarter’s figure to 10,229 homes and grew 10% on a dollar basis to $4.76 billion.

Average active communities were 438 during the quarter, up from 428 reported a year ago.

Mortgage Banking: Mortgage banking fees grew 3% year over year to $45.5 million. Mortgage closed loan production totaled $1.5 billion, down 2% year over year. The capture rate was 88% for the fourth quarter, up from 80% a year ago.

2023 Highlights

Earnings came in at $463.31 per share, reflecting a decrease from $491.82 reported a year ago. Homebuilding revenues were $9.31 billion, down from $10.33 billion in 2022. Total revenues were $9.52 billion, down 10% year over year. Settlements were 20,662 units, down 9%. Gross margin for the year decreased to 24.3% from 25.8% in 2022. Nonetheless, new orders grew 13% to 21,729 units for the year from 2022 level.


As of Dec 31, 2023, NVR had cash and cash equivalents for Homebuilding and Mortgage Banking of $3.13 billion and $36.4 million, respectively, compared with $2.5 billion and $19.4 million, respectively, at 2022-end.

During 2023, NVR repurchased 181,499 shares for $1.1 billion. At December 2023-end, the company had 3,194,876 shares outstanding.

Zacks Rank

NVR currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Construction Releases

PulteGroup Inc. (PHM - Free Report) reported mixed results in fourth-quarter 2023, wherein earnings surpassed the Zacks Consensus Estimates, but revenues missed the same. Both metrics decreased year over year. Shares of this notable homebuilder lost more than 1% following the earnings release on Jan 30.

Nonetheless, during the latter part of the fourth quarter, PulteGroup observed a notable surge in buyer activity, mainly attributed to declining interest rates. December emerged as the quarter's peak sales month. With the anticipation of sustained lower interest rates in 2024, the company remains optimistic that the enhanced affordability landscape will continue to attract prospective buyers.

D.R. Horton, Inc. (DHI - Free Report) reported first-quarter fiscal 2024 (ended Dec 31, 2023) results, wherein earnings missed the Zacks Consensus Estimate, but revenues surpassed the same.

DHI reported adjusted earnings of $2.82 per share for the fiscal first quarter, which missed the Zacks Consensus Estimate of $2.88 by 2.1% but improved 2% from the year-ago figure of $2.76. Total revenues (Homebuilding, Forestar, Rental and Financial Services) came in at $7.73 billion, up 6.5% year over year. The reported figure topped the consensus mark of $7.72 billion by 1.4%.

KB Home (KBH - Free Report) reported better-than-expected results in fourth-quarter fiscal 2023 (ended Nov 30, 2023). Both the earnings and revenues beat the Zacks Consensus Estimate. With this, the company’s earnings and revenues surpassed the consensus mark in four consecutive quarters.

Looking forward to the first quarter and the entirety of 2024, KBH foresees enhanced conditions in the housing market and ongoing positive trends in the supply chain. Leveraging the advantages of its Built to Order model, which provides buyers with choices, flexibility, and affordability, the company is confident in its ability to effectively navigate potential fluctuations in housing market conditions.

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