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New Forecasts: Here's What Analysts Think The Future Holds For NVR, Inc. (NYSE:NVR)

Simply Wall St
·3 min read

NVR, Inc. (NYSE:NVR) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company's business prospects. Investors have been pretty optimistic on NVR too, with the stock up 11% to US$3,726 over the past week. We'll be curious to see if these new estimates convince the market to lift the stock price higher still.

Following the upgrade, the latest consensus from NVR's five analysts is for revenues of US$7.3b in 2020, which would reflect a modest 2.9% improvement in sales compared to the last 12 months. Statutory earnings per share are anticipated to decrease 2.8% to US$217 in the same period. Prior to this update, the analysts had been forecasting revenues of US$6.4b and earnings per share (EPS) of US$177 in 2020. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.

Check out our latest analysis for NVR

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earnings-and-revenue-growth

With these upgrades, we're not surprised to see that the analysts have lifted their price target 20% to US$4,331 per share. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic NVR analyst has a price target of US$5,190 per share, while the most pessimistic values it at US$3,664. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await NVR shareholders.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's pretty clear that there is an expectation that NVR's revenue growth will slow down substantially, with revenues next year expected to grow 2.9%, compared to a historical growth rate of 8.8% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 5.1% per year. Factoring in the forecast slowdown in growth, it seems obvious that NVR is also expected to grow slower than other industry participants.

The Bottom Line

The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. Fortunately, they also upgraded their revenue estimates, and are forecasting revenues to grow slower than the wider market. Given that the consensus looks almost universally bullish, with a substantial increase to forecasts and a higher price target, NVR could be worth investigating further.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for NVR going out to 2021, and you can see them free on our platform here..

We also provide an overview of the NVR Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.

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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.