NVR (NVR) Down 8.8% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for NVR (NVR). Shares have lost about 8.8% in that time frame, underperforming the S&P 500.
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 the most recent earnings report in order to get a better handle on the important drivers.
NVR's Q4 Earnings & Revenues Miss, New Orders & Backlog Rise
NVR, Inc. reported lower-than-expected fourth-quarter 2021 results. Both the top and bottom lines lagged the respective the Zacks Consensus Estimate. Its earnings improved from the year-ago period despite revenue decline. Although the company has been witnessing strong demand for new homes, supply chain issues and inflationary pressure have been weighing on its performance.
Also, uncertainty regarding the extent and timing of disruption owing to the COVID-19 pandemic along with related governmental actions persist. Also, uncertain effects of economic relief efforts on the U.S. economy, unemployment, consumer confidence, demand for homes, and the mortgage market may put pressure on future operational and financial performance.
Inside the numbers
The company reported earnings of $89.09 per share, lagging the consensus mark of $100.34 by 11.2%. Nonetheless, the reported figure increased 16% from the prior-year figure of $76.93 per share.
Total revenues (Homebuilding & Mortgage Banking fees combined) amounted to $2.23 billion for the reported quarter, reflecting a decline of 5% on a year-over-year basis.
Segment Details
Homebuilding: Revenues in the segment totaled $2.18 billion, down 4% from the year-ago level. The metric also lagged the consensus estimate of $2.48 billion by 12.2%. Gross margin improved 490 basis points to 24.4%.
New orders increased 4% from the prior year to 5,685 units. The average sales price of new orders rose 14% from the prior-year quarter to $454,900. The cancellation rate was 10% for the quarter compared with 12% in the year-ago period. Settlements were down 16% year over year to 5,100 units. Average active communities totaled 414, down from 465 reported for third-quarter 2020.
Quarter-end backlog on a unit basis increased 10% from the prior-year figure of 12,730 and 26% on a dollar basis to $5.78 billion.
Mortgage Banking: Mortgage banking fees decreased 14.8% year over year to $59 million. Mortgage closed loan production totaled $1.48 billion, down 11% year over year. The capture rate was 89% for the fourth quarter, down from 90% a year ago.
Financials
At 2021-end, NVR had cash and cash equivalents for Homebuilding and Mortgage Banking of $2.55 billion and $28.4 million compared with $2.71 billion and $63.5 million, respectively, at 2020-end.
2021 Highlights
Earnings for 2021 came in at $320.48 per share, reflecting an increase of 39% from a year ago. Total revenues of $8.95 billion jumped 19% from the 2020 level.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.
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