It has been about a month since the last earnings report for NVR, Inc. (NYSE:NVR) . Shares have lost about 2.4% in that time frame.
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 its most recent earnings report in order to get a better handle on the important drivers.
First-Quarter 2018 Results
NVR reported adjusted first-quarter 2018 earnings of $39.34 per share, beating the Zacks Consensus Estimate of $31.44 by 25.1%. Earnings increased 57% from the prior-year quarter, benefitting from lower federal statutory tax rate and a tax benefit related to homes settled in 2017.
Total revenues (Homebuilding & Mortgage Banking fees) were $1.5 billion in the quarter, increasing 20% from the prior-year quarter on account of higher housing revenues.
Segment Details
Homebuilding: In the reported quarter, homebuilding revenues rose 19% year over year to $1.5 billion.
New orders rose 17% to 5,174 homes, driven by demand growth in the housing markets served by NVR. Settlements increased 20% from the year-ago quarter to 4,630 units. Average sales price was $378,200, down 4% year over year due to a shift in new orders to lower priced ones and slashed product prices.
At the end of the reported quarter, average community count was 485 compared with 486 in the prior year quarter. The company’s backlog totaled 9,809 homes (as of Mar 31), up 22% from the prior-year quarter. Potential housing revenues from backlog increased 17% to $3.7 billion.
Margins
Homebuilding gross margin expanded 90 basis points (bps) to 18.7%.
Selling, general and administrative (SG&A) expenses were $105.5 million, more than 99.9 million in the prior-year quarter.
Mortgage Banking: In the quarter, Mortgage banking fees grew 33.2% year over year to $39.3 million. Mortgage totaled $1 billion in closed loan production, rising 20% year over year.
Financials
NVR’s cash and cash equivalents were $414.8 million as of Mar 31, compared with $645.1 million as of Dec 31, 2017.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimate flatlined during the past month. There has been one revision higher for the current quarter compared to one lower.
VGM Scores
At this time, NVR has a great Growth Score of A, though it is lagging a bit on the momentum front with a B. The stock was also 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 A. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for growth investors than those looking for value and momentum.
Outlook
NVR has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
NVR, Inc. (NVR): Free Stock Analysis Report
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