It has been about a month since the last earnings report for NVR (NVR Quick QuoteNVR - Free Report) . Shares have lost about 4.4% 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 drivers.

NVR Q3 Earnings Lag, Homebuilding Revenues Top

NVR reported mixed third-quarter 2024 results, with earnings missing the Zacks Consensus Estimate and Homebuilding revenues surpassing the same. On the other hand, both metrics increased on a year-over-year basis.

This upside was backed by improved demand trends, which resulted in higher settlements. Although the cancellation rate increased in the quarter, growth in new orders is encouraging for the company.

Inside NVR’s Headlines

The company reported earnings of $130.50 per share, which missed the Zacks Consensus Estimate of $132.08 by 1.2%. The reported figure increased 4.2% from the prior-year quarter’s earnings of $125.26 per share.

Homebuilding revenues of $2.68 billion topped the consensus mark of $2.66 billion by 0.8%. Consolidated revenues (Homebuilding & Mortgage Banking fees combined) amounted to $2.73 billion, up 6% on a year-over-year basis.

Segment Details of NVR

Homebuilding: The segment’s revenues grew 7% from the year-ago quarter. Settlements in the quarter were up 5% year over year to 5,908 units. The average selling price (ASP) for the settlements was $453,200, up 1% year over year.

The gross margin contracted 90 basis points year over year to 23.4%, due to higher lot costs and closing cost assistance.

New orders increased 19% from the prior-year quarter’s level to 5,650 units. The ASP of new orders decreased 1% from the prior-year quarter’s figure to $450,700. The cancellation rate was 14.5%, up from 13.6% a year ago.

On a unit basis, backlog at the end of Sept. 30, 2024, improved 9% from the prior-year quarter’s figure to 11,339 homes and rose 11% on a dollar basis to $5.32 billion.

The average active communities were 422 in the quarter, down from 431 reported a year ago.

Mortgage Banking: Mortgage banking fees decreased 2.3% year over year to $55.3 million. Mortgage closed loan production totaled $1.66 billion, up 2% year over year. The capture rate was 86% in the third quarter, down from 89% a year ago.

NVR’s Financials

As of Sept. 30, 2024, NVR had cash and cash equivalents for Homebuilding and Mortgage Banking of $2.47 billion and $36.7 million, respectively, compared with $3.13 billion and $36.4 million at 2023-end.

During the third quarter, NVR repurchased 42,629 shares for $357.4 million. At September 2024 end, the company had 3,064,790 shares outstanding.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

VGM Scores

Currently, NVR has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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 broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, NVR has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.