It has been about a month since the las t earnings report for NVR (NVR). Shares have added about 2.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is NVR due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recen t earnings report in order to get a better handle on the important catalysts.
NVR's Q1 Earnings Beat Estimates, Revenues Increases Y/Y
NVR, Inc. reported adjusted earnings of $47.64 per share, beating the Zacks Consensus Estimate of $33.59 by 41.8%. Also, the reported figure increased 21% from the prior-year quarter.
Total revenues (Homebuilding & Mortgage Banking fees combined) were $1.69 billion in the quarter, up 10% year over year on higher segmental revenues. Segment Details Homebuilding
: Revenues in the homebuilding segment increased 10% year over year to approximately $1.64 billion. However, new orders fell 1% from the prior-year quarter to 5,139 units. Average sales price of new orders during the reported quarter was $367,000, reflecting a decline of 3% year over year. Nonetheless, settlements increased 15% from the year-ago quarter to 4,493 units.
Gross margin in the quarter contracted 20 basis points to 18.5%. However, income before tax grew 12% from the year-ago quarter. Selling, general and administrative expenses were $115.7 million, up 9.7% from the prior-year quarter.
Backlog (homes sold but not settled) as of Mar 31, 2019 declined 8% from the year-ago period to 9,011 units and 9% (on a dollar basis) to $3.4 billion.
At the end of the reported quarter, average community count was 449, down from the prior-year level of 485 units. Mortgage Banking
: In the reported quarter, Mortgage banking fees rose 11.4% year over year to $43.8 million. Mortgage closed loan production totaled $1.14 billion, increasing 13% year over year.
Income before tax also increased 35% during the reported quarter. Financials
As of Mar 31, 2019, NVR's cash and cash equivalents for Homebuilding and Mortgage Banking were $805.2 million and $11.3 million, respectively, compared with $688.8 million and $23.1 million in the corresponding period of 2018.
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 16.42% due to these changes.
At this time, NVR has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% 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.
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 #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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