Back to top

Image: Bigstock

Why Is NVR (NVR) Down 0.2% Since Last Earnings Report?

Read MoreHide Full Article

A month has gone by since the last earnings report for NVR (NVR - Free Report) . Shares have lost about 0.2% in that time frame, outperforming 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 catalysts.

NVR's Q2 Earnings Surpass Expectations, New Orders Increase

NVR, Inc. reported second-quarter 2019 results, wherein earnings surpassed the Zacks Consensus Estimate.

The country’s one of the leading homebuilding and mortgage banking companies reported earnings of $53.09 per share, beating the consensus mark of $45.15 by 17.6%. Also, the reported figure increased 8.2% from the prior-year quarter.

Total revenues (Homebuilding & Mortgage Banking fees combined) were $1.8 billion in the quarter, up 1% year over year on higher deliveries and prices.

Segment Details

Homebuilding: Revenues from the homebuilding segment were almost flat year over year at $1.76 billion. Settlements increased 2% from the year-ago quarter to 4,720 units. Average settlement price was $372.3k, reflecting an increase of 1.9% year over year.

New orders also increased 6% from the prior-year quarter to 5,239 units. Average sales price of new orders during the reported quarter was $358,600, reflecting a 5% year-over-year decline, mainly due to a continued shift to smaller and lower-priced products. A shift to markets with lower average sales prices added to the woes.

Gross margin in the quarter contracted 20 basis points to 18.9%. Also, income before tax dropped 2% from the year-ago quarter. Selling, general and administrative expenses were $112.2 million, up 5.3% from the prior-year quarter.

Backlog (homes sold but not settled) as of Jun 30, 2019 declined 6% from the year-ago period to 9,530 units and 9% (on a dollar basis) to $3.52 billion.

At the end of the reported quarter, average community count was 470, down from the prior-year level of 480 units.

Mortgage Banking: In the reported quarter, Mortgage banking fees rose 16% year over year to $42.7 million. Moreover, mortgage closed loan production totaled $1.23 billion, increasing 1% year over year.

Financials

As of Jun 30, 2019, NVR’s cash and cash equivalents for Homebuilding and Mortgage Banking were $861 million and $21.4 million compared with $688.8 million and $23.1 million, respectively, at 2018-end.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 12.09% due to these changes.

VGM Scores

Currently, NVR has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise NVR has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


NVR, Inc. (NVR) - free report >>

Published in