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NVR Gears Up to Report Q2 Earnings: Here's What to Expect
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NVR, Inc.’s (NVR - Free Report) second-quarter 2023 earnings and homebuilding revenues are likely to have declined on a year-over-year basis. The downside is driven by high mortgage rates and increased expenses.
In the last reported quarter, earnings topped the Zacks Consensus Estimate while homebuilding revenues missed the same. On a year-over-year basis, earnings and homebuilding revenues decreased 14.3% and 7.7%, respectively.
The company’s earnings topped analysts’ expectations in 15 of the trailing 20 quarters.
Trend in Estimate Revision
For the quarter to be reported, the Zacks Consensus Estimate for earnings per share has remained unchanged at $100.98 over the past 30 days. However, the estimated figure indicates a 18.3% decline from the year-ago quarter’s reported figure of $123.65 per share. The consensus mark for homebuilding revenues is pegged at $2.38 billion, suggesting an 8.9% decline from the year-ago reported figure of $2.61 billion.
NVR’s homebuilding revenues (accounted for 98.1% of total revenues in 2022) are expected to have declined in the second quarter from the year-ago level due to the moderation of demand amid rising mortgage rates. Although the company’s homebuilding revenues are likely to have witnessed tough year-over-year comparisons, NVR is expected to generate sequentially higher revenues, given the lack of existing homes for sale. Furthermore, the company’s acquisition strategy is likely to help it to partially offset the adverse effects of the aforementioned risks.
For the quarter, our model predicts the average selling price of settlements to decline 0.3% to $446,900 year over year. Also, we expect total settlement to decline 10.8% to 5,191 units on a year-over-year basis.
The ongoing uncertainty in the economy, persisting inflation and high interest rates have led to the decline in housing demand.
Meanwhile, the bottom line of NVR is quite likely to be affected by material cost inflation and rising wages. We expect the homebuilding gross margin to reduce 250 basis points to 23.8% in the quarter. Also, we expect income before tax (homebuilding segment) is expected to decline by 22.5% year over year to $422.2 million.
Owing to the aforementioned economic uncertainties, for second-quarter 2023, we expect total backlog to decline 9.9% to 11,071 units and total backlog value by 12.5% to $5,09 billion, year over year.
What Our Model Unveils
Our proven model does not conclusively predict an earnings beat for NVR this time around. The company does not have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — to increase the odds of an earnings beat.
Earnings ESP: The company has an Earnings ESP of 0.00%. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Zacks Rank: NVR currently carries a Zacks Rank of 3.
Stocks With Favorable Combination
Here are some companies in the Zacks Construction sector, which according to our model, have the right combination of elements to post an earnings beat for their respective quarters to be reported.
BCC’s earnings for the to-be-reported quarter are expected to decline 53.7%. The company reported better-than-expected earnings in three of the last four quarters and missed on one occasion, the average surprise being 19%.
PulteGroup (PHM - Free Report) has an Earnings ESP of +1.17% and sports a Zacks Rank of 1.
PHM’s earnings for the to-be-reported quarter are expected to decline 10.3%. The company reported better-than-expected earnings in three of the last four quarters and missed on one occasion, the average surprise being 15.6%.
Vulcan Materials Company (VMC - Free Report) has an Earnings ESP of +5.94% and carries a Zacks Rank of 2.
VMC is expected to register a 25.5% increase in earnings for the to-be-reported quarter. Notably, the company reported better-than-expected earnings in two of the last four quarters and missed on the other two occasions, the average surprise being 7.1%.
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NVR Gears Up to Report Q2 Earnings: Here's What to Expect
NVR, Inc.’s (NVR - Free Report) second-quarter 2023 earnings and homebuilding revenues are likely to have declined on a year-over-year basis. The downside is driven by high mortgage rates and increased expenses.
In the last reported quarter, earnings topped the Zacks Consensus Estimate while homebuilding revenues missed the same. On a year-over-year basis, earnings and homebuilding revenues decreased 14.3% and 7.7%, respectively.
The company’s earnings topped analysts’ expectations in 15 of the trailing 20 quarters.
Trend in Estimate Revision
For the quarter to be reported, the Zacks Consensus Estimate for earnings per share has remained unchanged at $100.98 over the past 30 days. However, the estimated figure indicates a 18.3% decline from the year-ago quarter’s reported figure of $123.65 per share. The consensus mark for homebuilding revenues is pegged at $2.38 billion, suggesting an 8.9% decline from the year-ago reported figure of $2.61 billion.
NVR, Inc. Price and EPS Surprise
NVR, Inc. price-eps-surprise | NVR, Inc. Quote
Key Factors to Consider
NVR’s homebuilding revenues (accounted for 98.1% of total revenues in 2022) are expected to have declined in the second quarter from the year-ago level due to the moderation of demand amid rising mortgage rates. Although the company’s homebuilding revenues are likely to have witnessed tough year-over-year comparisons, NVR is expected to generate sequentially higher revenues, given the lack of existing homes for sale. Furthermore, the company’s acquisition strategy is likely to help it to partially offset the adverse effects of the aforementioned risks.
For the quarter, our model predicts the average selling price of settlements to decline 0.3% to $446,900 year over year. Also, we expect total settlement to decline 10.8% to 5,191 units on a year-over-year basis.
The ongoing uncertainty in the economy, persisting inflation and high interest rates have led to the decline in housing demand.
Meanwhile, the bottom line of NVR is quite likely to be affected by material cost inflation and rising wages. We expect the homebuilding gross margin to reduce 250 basis points to 23.8% in the quarter. Also, we expect income before tax (homebuilding segment) is expected to decline by 22.5% year over year to $422.2 million.
Owing to the aforementioned economic uncertainties, for second-quarter 2023, we expect total backlog to decline 9.9% to 11,071 units and total backlog value by 12.5% to $5,09 billion, year over year.
What Our Model Unveils
Our proven model does not conclusively predict an earnings beat for NVR this time around. The company does not have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — to increase the odds of an earnings beat.
Earnings ESP: The company has an Earnings ESP of 0.00%. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Zacks Rank: NVR currently carries a Zacks Rank of 3.
Stocks With Favorable Combination
Here are some companies in the Zacks Construction sector, which according to our model, have the right combination of elements to post an earnings beat for their respective quarters to be reported.
Boise Cascade Company (BCC - Free Report) has an Earnings ESP of +2.36% and a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
BCC’s earnings for the to-be-reported quarter are expected to decline 53.7%. The company reported better-than-expected earnings in three of the last four quarters and missed on one occasion, the average surprise being 19%.
PulteGroup (PHM - Free Report) has an Earnings ESP of +1.17% and sports a Zacks Rank of 1.
PHM’s earnings for the to-be-reported quarter are expected to decline 10.3%. The company reported better-than-expected earnings in three of the last four quarters and missed on one occasion, the average surprise being 15.6%.
Vulcan Materials Company (VMC - Free Report) has an Earnings ESP of +5.94% and carries a Zacks Rank of 2.
VMC is expected to register a 25.5% increase in earnings for the to-be-reported quarter. Notably, the company reported better-than-expected earnings in two of the last four quarters and missed on the other two occasions, the average surprise being 7.1%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.