NVR Q3 Earnings Beat, Homebuilding Revenues Miss, Margin Up
NVR, Inc. NVR reported mixed third-quarter 2023 results, with earnings surpassing the Zacks Consensus Estimate and Homebuilding revenues missing the same. Although the top line increased on a year-over-year basis, the bottom line declined due to softened housing demand and macroeconomic woes.
Shares of this leading homebuilder dropped 2.18% on Oct 24, 2023, after the earnings release.
Inside the Numbers
The company reported earnings of $125.26 per share, which topped the consensus mark of $112.79 by 11.1%. The reported figure increased by 5.7% from the prior-year quarter’s figure of $118.51 per share.
NVR, Inc. Price, Consensus and EPS Surprise
NVR, Inc. price-consensus-eps-surprise-chart | NVR, Inc. Quote
Total revenues (Homebuilding & Mortgage Banking fees combined) amounted to $2.57 billion for the reported quarter, reflecting a decline of 7% on a year-over-year basis.
Segment Details
Homebuilding: Revenues in the segment totaled $2.51 billion, down 8% from the year-ago quarter. The metric lagged the consensus estimate of $2.59 billion by 3%. Settlements in the quarter were down 6% year over year to 5,606 units. Our model predicted settlements to decline 6.6% year over year to 5,559 units. The average selling price, or ASP, was $448,000, down 3% year over year. Our estimate for the metric was $452,900.
Gross margin expanded 70 basis points year over year to 24.3%. Our estimate for the metric was 24.4%.
New orders, net of cancellations, declined 7% from the prior-year quarter’s levels to 4,746 units. The average sales price of new orders increased 1% from the prior-year quarter’s figure to $456,100. However, our model predicted the average sales price of new orders to decline 1.4% year over year to $447,100. The cancellation rate was 14% for the quarter, down from 15% a year ago.
On a unit basis, the quarter-end backlog declined 4% from the prior-year quarter’s figure of 10,371 homes and fell 6% on a dollar basis to $4.8 billion.
Average active communities were 431 during the quarter versus 423 reported a year ago.
Mortgage Banking: Mortgage banking fees grew 51.2% year over year to $56.6 million. Mortgage closed loan production totaled $1.62 billion, down 2% year over year. The capture rate was 89% for the third quarter, up from 81% a year ago.
Financials
At the third-quarter end, NVR had cash and cash equivalents for Homebuilding and Mortgage Banking of $2.88 billion and $32.3 million, respectively, compared with $2.5 billion and $19.4 million, respectively, at 2022-end.
During the third quarter, NVR repurchased 78,750 shares for $484.3 million. At September-end, the company had 3,209,977 shares outstanding.
Zacks Rank & Recent Construction Releases
NVR currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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