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When NVR, Inc. (NYSE:NVR) released its most recent earnings update (31 March 2019), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were NVR's average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not NVR actually performed well. Below is a quick commentary on how I see NVR has performed.
How NVR fared against its long-term earnings performance and its industry
NVR's trailing twelve-month earnings (from 31 March 2019) of US$820m has jumped 36% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 23%, indicating the rate at which NVR is growing has accelerated. How has it been able to do this? Well, let’s take a look at whether it is solely because of industry tailwinds, or if NVR has experienced some company-specific growth.
In terms of returns from investment, NVR has invested its equity funds well leading to a 43% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 25% exceeds the US Consumer Durables industry of 7.1%, indicating NVR has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for NVR’s debt level, has increased over the past 3 years from 34% to 37%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 45% to 36% over the past 5 years.
What does this mean?
NVR's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? You should continue to research NVR to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for NVR’s future growth? Take a look at our free research report of analyst consensus for NVR’s outlook.
- Financial Health: Are NVR’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 March 2019. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.