Solid top-line performance and upward estimate revisions make NVR, Inc. (NVR - Free Report) an attractive investment option. The company is engaged in the construction and sale of single-family detached homes, townhomes and condominium buildings and has a solid business model to support its sales growth.
Driven by such positives, analysts are optimistic about the potential of this Zacks Rank #1 (Strong Buy) stock. The following reasons substantiate the analysts’ support toward this stock.
NVR has significantly outperformed the industry it belongs to on a year-to-date basis. While the stock has rallied 60.8%, the industry gained just 25.6% in the same time period. Also, the company has outperformed the broader S&P 500 Index gain of 9.1%.
Earnings and Revenue Growth
NVR’s sales and earnings for the current year are expected to increase nearly 10% and 33.9%, respectively.
Moreover, NVR has outpaced the Zacks Consensus Estimate in three of the trailing four quarters, delivering a positive average earnings surprise of 14.19%.
In addition to the estimated trends, in the first half of 2017, the company reported earnings of $60.36 per share, reflecting 59.6% year-over-year growth. Total revenue (Homebuilding & Mortgage Banking fees) in the same period increased 11% year over year, driven by higher housing revenues and mortgage-banking fees.
For all these reasons, and more, the company currently has a Growth Score of ‘A’ on our style score system that helps us to identify potential outperformers.
Annual estimates for NVR have moved north over the past 60 days, reflecting analysts’ confidence in the stock. Over this period, estimates have increased 7.3% for 2017. Additionally, for 2018, estimates have moved up 4.9%.
Return on Equity (ROE)
NVR’s ROE of 37.4%, as compared with the industry average of 10.2%, reflects the company’s efficiency in utilizing shareholders’ funds.
Moreover, the company’s robust performance is largely backed by its disciplined business model, focused on maximizing liquidity and minimizing risk. Unlike other homebuilders, NVR’s sole business is selling and building quality homes by typically acquiring finished building lots, without the risk of owning and developing land in a cyclical industry. The cash generated is used to expand its business while excess capital is returned to shareholders through share repurchase programs.
Other Stocks to Consider
Other top-ranked stocks in the industry are KB Home (KBH - Free Report) , Beazer Homes USA, Inc. (BZH - Free Report) and Lennar Corporation (LEN - Free Report) .
While KB Home sports a Zanks Rank #1, Beazer and Lennar carry a Zanks Rank #2 (Buy).
You can see the complete list of today’s Zacks #1 Rank stocks here.
KB Home pulled off a positive earnings surprise in each of the trailing four quarters with an average beat of 12.47%. Further, for the current quarter, EPS is projected to grow 12.2%.
Beazer’s earnings surpassed the Zacks Consensus Estimate in two of the trailing four quarters, with an average beat of 103.47%. Meanwhile, for the current quarter, EPS is expected to rise 75.8%.
Expected EPS for Lennar in the current quarter is 0.6%. Moreover, the trailing four-quarter average earnings surprise is a positive 11.55%.
4 Surprising Tech Stocks to Keep an Eye On
Tech stocks have been a major force behind the market’s record highs, but picking the best ones to buy can be tough. There’s a simple way to invest in the success of the entire sector. Zacks has just released a Special Report revealing one thing tech companies literally cannot function without.
More importantly, it reveals 4 top stocks set to skyrocket on increasing demand for these devices. I encourage you to get the report now – before the next wave of innovations really take off.
See Stocks Now>>