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NVR, Inc (NVR) Beats on Q1 Earnings, Homebuilding Solid

MAS LPX PHM NVR

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NVR, Inc. (NVR - Free Report) , one of the nation’s largest homebuilding and mortgage-banking companies, reported first-quarter 2017 earnings of $25.12 per share, surpassing the Zacks Consensus Estimate of $19.74 by 27.3%. The reported figure also rose 59% from the year-ago profit level of $15.79 per share.

Total revenue (Homebuilding & Mortgage Banking fees) totaled $1.28 billion in the quarter and increased 12% year over year, driven by higher housing revenues and mortgage-banking fees.

Segment Details

Homebuilding: In the reported quarter, homebuilding revenues rose 11% year over year to $1.25 billion.

New orders climbed 7% to 4,424 homes, driven by demand growth in the housing markets served by NVR. Settlements increased 8% year over year to 3,256 units. Average settlement price was $392,600, up 5% from a year ago.

At the end of the reported quarter, average community count was 486, up 1.8% year over year.

The company’s backlog totaled 8,052 homes (as of Mar 31, 2017), up 9% year over year. Potential housing revenues from backlog increased 13% to $3.19 billion.

Margins

Gross profit margin expanded 30 basis points (bps) to 17.8%.

As a percentage of homebuilding revenues, selling, general and administrative expenses (SG&A) were 8%, down 70 bps year over year.

Homebuilding operating margin increased 100 bps year over year to 9.8%.

Mortgage Banking: In the quarter, Mortgage banking fees grew 31.1% year over year to $29.5 million. Mortgage closed loan production in the quarter totaled $843.3 million, reflecting an increase of 12% year over year.

Financials

NVR’s cash and cash equivalents totaled $492.5 million as of Mar 31, 2017, compared with $395.4 million as of Dec 31, 2016.

NVR, Inc. Price, Consensus and EPS Surprise

Zacks Rank

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

Upcoming Releases in the Construction Sector

Masco Corporation (MAS - Free Report) is slated to release its quarterly results on Apr 25. The Zacks Consensus Estimate for earnings is pegged at 36 cents, an increase of 11.3% year over year.

PulteGroup, Inc. (PHM - Free Report) is slated to release its quarterly results on Apr 25. The Zacks Consensus Estimate for earnings is 28 cents, an increase of 16.7% on a year-over-year basis.

Louisiana-Pacific Corp. (LPX - Free Report) is scheduled to release its quarterly numbers on May 5. The Zacks Consensus Estimate for earnings is pegged at 29 cents, an increase of 319.1% on a year-over-year basis.

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