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NVR Q2 Earnings Miss Estimates, Revenues Beat, Stock Down

·3 min read

NVR, Inc. NVR shares dropped 2.4% during the trading session on Jul 26, following its second-quarter 2022 earnings release. This homebuilding and mortgage banking company’s earnings missed the Zacks Consensus Estimate but revenues surpassed the same.

Higher average price of settlements in the quarter and lower lumber prices led to the year-over-year improvement.

Inside the Numbers

The company reported earnings of $123.65 per share, which lagged the consensus mark of $137.54 by 10.1%. The reported figure increased 50% from the prior-year figure of $82.45 per share.

Total revenues (Homebuilding & Mortgage Banking fees combined) amounted to $2.66 billion for the reported quarter, reflecting growth of 16% on a year-over-year basis.

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

Segment Details

Homebuilding: Revenues in the segment totaled $2.61 billion, up 17% from the year-ago level. The metric also topped the consensus estimate of $2.60 billion by 0.2%. Settlements in the quarter were up 2% year over year to 5,820 units. The average selling price or ASP was $448,400, reflecting an increase of 15% year over year.

Gross margin improved 370 basis points to 26.3%, buoyed by higher ASP.

New orders were down 16% from the prior year to 4,663 units. The average sales price of new orders rose 7% from the prior-year quarter to $471,600. The cancellation rate was 14% for the quarter, up from 8% in the year-ago period. Average active communities totaled 406, down from 420 reported for second-quarter 2021.

Quarter-end backlog on a unit basis decreased 3% from the prior-year figure of 12,286 but increased 8% on a dollar basis to $5.82 billion.

Mortgage Banking: Mortgage banking fees decreased 17.2% year over year to $48.9 million. Mortgage closed loan production totaled $1.65 billion, up 5% year over year. The capture rate was 84% for the second quarter, down from 89% a year ago.

Financials

At second-quarter end, NVR had cash and cash equivalents for Homebuilding and Mortgage Banking of $1.48 billion and $16.2 million compared with $2.55 billion and $28.4 million, respectively, at 2021-end.

Zacks Rank

NVR currently carries a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

A Few Recent Construction Releases

PulteGroup Inc. PHM reported mixed results for second-quarter 2022, with earnings surpassing the Zacks Consensus Estimate but revenues missing the same.

Earnings for PHM grew 58.7%, from $1.72 per share a year ago. Revenues increased 16.9% from the year-ago figure of $3.36 billion.

D.R. Horton, Inc.’s DHI third-quarter fiscal 2022 earnings beat the Zacks Consensus Estimate but revenues missed the same.

DHI also lowered its revenue guidance for the full year, given the expected completion dates of homes under construction and current market conditions.

UFP Industries, Inc. UFPI reported stellar second-quarter 2022 results. Both earnings and net sales beat the Zacks Consensus Estimate and increased on a year-over-year basis.

UFPI expects that its balanced business model and operational improvements will continue to help it navigate new challenges, like rising interest rates and historically high inflation. In the near term, it expects more normalized demand in its largest segment — retail solutions — but year-over-year improvement in the third quarter.


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