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NVR's Shares Jump More Than 6% as Q1 Earnings Beat Estimates

Zacks Equity Research

NVR, Inc.’s NVR shares gained 6.1% in yesterday’s trading session, after the company beat earnings expectations in first-quarter 2019.

The country’s leading homebuilding and mortgage banking company reported adjusted earnings of $47.64 per share, beating the Zacks Consensus Estimate of $33.59 by 41.8%. Also, the reported figure increased 21% from the prior-year quarter.

Total revenues (Homebuilding & Mortgage Banking fees combined) were $1.69 billion in the quarter, up 10% year over year on higher segmental revenues.

NVR, Inc. Price, Consensus and EPS Surprise

NVR, Inc. Price, Consensus and EPS Surprise | NVR, Inc. Quote

Segment Details

Homebuilding: Revenues in the homebuilding segment increased 10% year over year to approximately $1.64 billion. However, new orders fell 1% from the prior-year quarter to 5,139 units. Average sales price of new orders during the reported quarter was $367,000, reflecting a decline of 3% year over year. Nonetheless, settlements increased 15% from the year-ago quarter to 4,493 units.

Gross margin in the quarter contracted 20 basis points to 18.5%. However, income before tax grew 12% from the year-ago quarter. Selling, general and administrative expenses were $115.7 million, up 9.7% from the prior-year quarter.

Backlog (homes sold but not settled) as of Mar 31, 2019 declined 8% from the year-ago period to 9,011 units and 9% (on a dollar basis) to $3.4 billion.

At the end of the reported quarter, average community count was 449, down from the prior-year level of 485 units.

Mortgage Banking: In the reported quarter, Mortgage banking fees rose 11.4% year over year to $43.8 million. Mortgage closed loan production totaled $1.14 billion, increasing 13% year over year.

Income before tax also increased 35% during the reported quarter.

Financials

As of Mar 31, 2019, NVR’s cash and cash equivalents for Homebuilding and Mortgage Banking were $805.2 million and $11.3 million, respectively, compared with $688.8 million and $23.1 million in the corresponding period of 2018.

Zacks Rank

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

Peer Releases

KB Home’s KBH first-quarter fiscal 2019 earnings of 31 cents per share outpaced the Zacks Consensus Estimate of 27 cents by 14.8% but declined 22.5% from 40 cents a year ago. Total revenues of $811.5 million, however, missed the consensus mark of $829.3 million and declined 6.9% year over year.

United Rentals’ URI first-quarter 2019 adjusted earnings of $3.31 per share topped the consensus mark of $3.06 by 8.3% and increased 15.3% from the prior-year period. Total revenues of $2.12 billion also surpassed the consensus mark of $2.07 billion by 2.5%. Moreover, the said figure rose 22.1% year over year.

Fastenal Company’s FAST earnings came in at 68 cents per share in first-quarter 2019, beating  the Zacks Consensus Estimate by 1.5% and increasing 11.9% from 61 cents reported a year ago. Also, net sales of $1.31 billion topped the consensus mark of $1.3 billion and grew 10.4% year over year.

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