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NVR's Q4 Earnings Top Estimates, Shares Down on Revenue Miss

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NVR, Inc. (NVR - Free Report) reported mixed fourth-quarter 2019 financial numbers, with earnings beating the Zacks Consensus Estimate and revenues missing the same. Following the release, the company’s shares dropped nearly 1% in the after-hour trading session on Jan 28.

The country’s leading homebuilding and mortgage banking company reported earnings of $64.41 per share, which surpassed the consensus mark of $58.65 by 9.8%. Also, the reported figure increased 10% from the prior-year quarter’s figure.

Total revenues (Homebuilding & Mortgage Banking fees combined) amounted to $1.99 billion during the reported quarter. The figure declined 0.2% on a year-over-year basis due to lower average selling prices.

NVR, Inc. Price, Consensus and EPS Surprise

 

 

Segment Details

Homebuilding: Revenues in the segment totaled $1,946.9 million, down 0.4% from the year-ago quarter’s level. Settlements rose 3% year over year to 5,331 units. However, average settlement price was $365,200, down 3.1% year over year.

New orders during the quarter increased 14% from the prior-year quarter’s period to 4,392 units. Also, average sales price of new orders inched up 1% from the prior-year quarter to $381,100.

In the quarter under review, gross margin improved 90 basis points to 19.5%. Also, income before tax increased 6% from the year-ago quarter’s level. Selling, general and administrative expenses were $109.6 million, up 2% from the prior-year quarter’s level.

As of Dec 31, 2019, backlog (homes sold but not settled) declined 2% from the year-ago period’s level to 8,233 units and 1% (on a dollar basis) to $3.1 billion. At the end of the reported quarter, average community count was 487, up from the prior-year quarter’s level of 463 units.

Mortgage Banking: Mortgage banking fees increased 8% year over year to $43.3 million. Moreover, mortgage closed loan production totaled $1.42 billion, up 5% year over year.

Financials

As of Dec 31, 2019, NVR had cash and cash equivalents for Homebuilding and Mortgage Banking of $1,111 million and $29.4 million compared with $688.8 million and $23.1 million, respectively, at 2018-end.

2019 Highlights

In 2019, Homebuilding revenues amounted to $7.2 billion, up 3.1% year over year.

Earnings per share for the year ended Dec 31, 2019 was reported at $221.13 compared with $194.80 in 2018.

Average settlement price was $367,100 for 2019 compared with $379,700 in 2018.

Zacks Rank and Key Picks

Currently, NVR carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks in the Zacks Building Products - Home Builders industry are KB Home (KBH - Free Report) , M/I Homes, Inc. (MHO - Free Report) and Meritage Homes Corporation (MTH - Free Report) , each sporting a Zacks Rank #1.

KB Home has three-five year expected EPS growth rate of 10.9%.

M/I Homes has trailing four-quarter positive earnings surprise of 16.2%. The company’s earnings beat estimates in all of the last four quarters.

Meritage Homes’ 2020 earnings are expected to rise 19.2%.

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