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NVR Q3 Earnings Beat Estimatess, Up Y/Y, New Orders Increase

NVR, Inc. NVR reported solid results in third-quarter 2019. The company’s earnings not only surpassed the Zacks Consensus Estimate but also improved on a year-over-year basis.

The country’s leading homebuilding and mortgage banking company reported earnings of $56.11 per share, which surpassed the consensus mark of $51.78 by 8.4%. Also, the reported figure increased 16.2% from the prior-year quarter.

Total revenues (Homebuilding & Mortgage Banking fees combined) came in at $1.91 billion during the reported quarter, up 3% year over year on higher deliveries, partially offset by lower selling prices.

NVR, Inc. Price, Consensus and EPS Surprise

NVR, Inc. Price, Consensus and EPS Surprise
NVR, Inc. Price, Consensus and EPS Surprise

NVR, Inc. price-consensus-eps-surprise-chart | NVR, Inc. Quote

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Segment Details

Homebuilding: In the reported quarter, Homebuilding segment’s revenues totaled $1.87 billion, up 11% from the year-ago period. Settlements grew 8% year over year to 5,124 units. However, average settlement price was $365.5k, reflecting a decrease of 1.3% year over year.

New orders during the quarter increased 11% from the prior-year period to 4,766 units. However, average sales price of new orders declined 1% from the prior-year quarter to $369,200, 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.

In the quarter under review, gross margin improved 40 basis points to 19%. Also, income before tax increased 10% from the year-ago quarter. Selling, general and administrative expenses were $110 million, up 0.5% from the prior-year quarter.

As of Sep 30, 2019, backlog (homes sold but not settled) declined 6% from the year-ago period to 9,172 units and 7% (on a dollar basis) to $3.4 billion. At the end of the reported quarter, average community count was 473, down from the prior-year level of 479 units.

Mortgage Banking:  Mortgage banking fees fell 12% year over year to $37.9 million due to the timing of loan sales and a decrease in the fair value measurement adjustment. Moreover, mortgage closed loan production totaled $1.37 billion, up 10% year over year.

Financials

As of Sep 30, 2019, NVR had cash and cash equivalents for Homebuilding and Mortgage Banking of $1,068 million and $26.8 million compared with $688.8 million and $23.1 million, respectively, at 2018-end.

Zacks Rank

Currently, NVR carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Peer Releases

Lennar Corporation LEN reported better-than-expected results in third-quarter fiscal 2019 (ended Aug 31, 2019). The results mainly benefited from a solid resurgence in demand for new homes, depicting a healthy economy and declining borrowing costs.

KB Home KBH reported third-quarter fiscal 2019 results, wherein earnings beat analysts’ expectation but revenues missed the same. The results mainly benefited from continued progress of the Returns-Focused Growth plan, given stellar average community count growth. Although the company’s top and bottom lines declined on a year-over-year basis, it remains upbeat about improvement in fiscal fourth-quarter results.

Upcoming Peer Release

PulteGroup, Inc. PHM is scheduled to report third-quarter results on Oct 22. The company’s third-quarter earnings are projected at 92 cents, indicating a 8.9% year-over-year decline.

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Lennar Corporation (LEN) : Free Stock Analysis Report
 
PulteGroup, Inc. (PHM) : Free Stock Analysis Report
 
KB Home (KBH) : Free Stock Analysis Report
 
NVR, Inc. (NVR) : Free Stock Analysis Report
 
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