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NVR Gears Up to Report Q2 Earnings: What's in the Offing?
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NVR, Inc. (NVR - Free Report) is likely to generate higher earnings and homebuilding revenues in second-quarter 2024 on a year-over-year basis.
In the last reported quarter, earnings topped the Zacks Consensus Estimate by 9.8%, while the homebuilding revenues beat the same by 6.1%. On a year-over-year basis, earnings and homebuilding revenues increased 17% and 7%, respectively.
The company’s earnings topped analysts’ expectations in 19 of the trailing 24 quarters.
Trend in Estimate Revision
For the quarter to be reported, the Zacks Consensus Estimate for earnings per share (EPS) has remained stable at $121.65 over the past 60 days. The estimated figure indicates a rise of 4.4% from the year-ago quarter.
The consensus mark for revenues is pegged at $2.48 billion, indicating an increase of 8.7% from the year-ago reported figure of $2.28 billion.
Key Factors to Note
NVR’s second-quarter Homebuilding revenues (which accounted for 98.4% of 2023 total revenues) are expected to have increased from the year-ago level on improving demand trends. The upside is mainly backed by the low supply of existing homes and decreasing cancelation rates. Also, a strong business model and a stabilizing economy are likely to have aided the company’s results to some extent.
Our model predicts Homebuilding revenues to grow 8.3% year over year to $2.47 billion in the to-be-reported quarter. The metric is expected to have improved from the $2.28 billion reported in the prior-year quarter. For the quarter to be reported, our model predicts the average selling price of settlements to improve 0.2% year over year to $450,200. Also, we anticipate total settlements to increase 8% to 5,492 units on a year-over-year basis.
Meanwhile, the bottom line of NVR is quite likely to have been affected by higher land, labor and material costs. The tight labor market is an additional concern. We expect the homebuilding gross margin to be 24.3%, flat year over year.
Also, we expect selling, general and administrative expenses to increase 15.9% and operating income to grow 6.3% year over year for the homebuilding segment.
Apart from these, our model predicts total new orders to increase 2.9% year over year to 6,078 units. The same for backlog is currently pegged at 11,774 units, which indicates a rise from 11,231 units reported a year ago. Our model predicts the value of the backlog to be $5.53 billion, implying growth from $5.15 billion in the corresponding 2023 quarter.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for NVR for the quarter to be reported. 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. This is not the case here.
Earnings ESP: The company has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: NVR currently carries a Zacks Rank #3.
Stocks With the Favorable Combination
Here are some companies in the Zacks Construction sector that, according to our model, have the right combination of elements to post an earnings beat in the quarter to be reported.
MTH’s earnings topped the consensus mark in all the last four quarters, with the average being 27%. Earnings for the to-be-reported quarter are expected to grow 3% year over year.
Dycom Industries (DY - Free Report) has an Earnings ESP of +3.90% and carries a Zacks Rank #2.
DY’s earnings beat the consensus mark in three of the last four quarters and missed on one occasion, the average surprise being 30.2%. Earnings for the to-be-reported quarter are expected to grow 6.4% year over year.
KBR, Inc. (KBR - Free Report) has an Earnings ESP of +0.82% and carries a Zacks Rank #3.
KBR’s earnings beat the consensus mark in the last four quarters, the average surprise being 5%. Earnings for the to-be-reported quarter are expected to grow 6.8% year over year.
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NVR Gears Up to Report Q2 Earnings: What's in the Offing?
NVR, Inc. (NVR - Free Report) is likely to generate higher earnings and homebuilding revenues in second-quarter 2024 on a year-over-year basis.
In the last reported quarter, earnings topped the Zacks Consensus Estimate by 9.8%, while the homebuilding revenues beat the same by 6.1%. On a year-over-year basis, earnings and homebuilding revenues increased 17% and 7%, respectively.
The company’s earnings topped analysts’ expectations in 19 of the trailing 24 quarters.
Trend in Estimate Revision
For the quarter to be reported, the Zacks Consensus Estimate for earnings per share (EPS) has remained stable at $121.65 over the past 60 days. The estimated figure indicates a rise of 4.4% from the year-ago quarter.
NVR, Inc. Price and EPS Surprise
NVR, Inc. price-eps-surprise | NVR, Inc. Quote
The consensus mark for revenues is pegged at $2.48 billion, indicating an increase of 8.7% from the year-ago reported figure of $2.28 billion.
Key Factors to Note
NVR’s second-quarter Homebuilding revenues (which accounted for 98.4% of 2023 total revenues) are expected to have increased from the year-ago level on improving demand trends. The upside is mainly backed by the low supply of existing homes and decreasing cancelation rates. Also, a strong business model and a stabilizing economy are likely to have aided the company’s results to some extent.
Our model predicts Homebuilding revenues to grow 8.3% year over year to $2.47 billion in the to-be-reported quarter. The metric is expected to have improved from the $2.28 billion reported in the prior-year quarter. For the quarter to be reported, our model predicts the average selling price of settlements to improve 0.2% year over year to $450,200. Also, we anticipate total settlements to increase 8% to 5,492 units on a year-over-year basis.
Meanwhile, the bottom line of NVR is quite likely to have been affected by higher land, labor and material costs. The tight labor market is an additional concern. We expect the homebuilding gross margin to be 24.3%, flat year over year.
Also, we expect selling, general and administrative expenses to increase 15.9% and operating income to grow 6.3% year over year for the homebuilding segment.
Apart from these, our model predicts total new orders to increase 2.9% year over year to 6,078 units. The same for backlog is currently pegged at 11,774 units, which indicates a rise from 11,231 units reported a year ago. Our model predicts the value of the backlog to be $5.53 billion, implying growth from $5.15 billion in the corresponding 2023 quarter.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for NVR for the quarter to be reported. 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. This is not the case here.
Earnings ESP: The company has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: NVR currently carries a Zacks Rank #3.
Stocks With the Favorable Combination
Here are some companies in the Zacks Construction sector that, according to our model, have the right combination of elements to post an earnings beat in the quarter to be reported.
Meritage Homes Corporation (MTH - Free Report) has an Earnings ESP of +0.64% and carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
MTH’s earnings topped the consensus mark in all the last four quarters, with the average being 27%. Earnings for the to-be-reported quarter are expected to grow 3% year over year.
Dycom Industries (DY - Free Report) has an Earnings ESP of +3.90% and carries a Zacks Rank #2.
DY’s earnings beat the consensus mark in three of the last four quarters and missed on one occasion, the average surprise being 30.2%. Earnings for the to-be-reported quarter are expected to grow 6.4% year over year.
KBR, Inc. (KBR - Free Report) has an Earnings ESP of +0.82% and carries a Zacks Rank #3.
KBR’s earnings beat the consensus mark in the last four quarters, the average surprise being 5%. Earnings for the to-be-reported quarter are expected to grow 6.8% year over year.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.