BTIG maintains Neutral on NVR stock, trims EPS estimates

On Wednesday, BTIG analyst Carl Reichardt Jr. maintained a Neutral rating on shares of NVR Inc . (NYSE:NVR), while slightly lowering earnings per share (EPS) estimates for the upcoming years. The revision comes after NVR reported fourth-quarter earnings of $139.93 per share, surpassing BTIG’s estimate of $130.42 and the Factset consensus of $129.35. According to InvestingPro data, NVR maintains a "GREAT" financial health score of 3.12, with particularly strong profitability metrics including a 25.8% gross profit margin and 39% return on equity.

The better-than-expected earnings were attributed to a combination of factors, including higher delivery volumes, reduced sales and general and administrative expenses as a percentage of sales, improved mortgage banking pre-tax income, and a lower tax rate than anticipated. These positive elements were partially offset by a decline in delivery price and a marginal increase in share count.

Despite the earnings beat, NVR experienced an 8% drop in unit orders compared to the same period last year, which contrasted with BTIG’s expectation of a 3% increase. However, the analyst pointed out that third-quarter orders had grown by 19%, significantly ahead of their 5% growth estimate. This robust performance in the third quarter brought the total orders for the second half of the year closer to BTIG’s original forecast. InvestingPro subscribers have access to 12 additional key insights about NVR’s performance, including detailed analysis of its order trends and market positioning.

NVR has seen a 3% decrease in average community count, which remains a point of concern for both the management and BTIG. Even though the absorption pace is reasonable at one per week per store and cycle times have largely normalized, the company’s ability to grow hinges on increasing community count. Despite this, NVR has been consistently buying back shares, with the share count having decreased by 27% since the end of 2014.

Reichardt Jr. noted that while NVR’s land-light and highly efficient production model continues to yield returns significantly above the industry average, the company is expected to be a slower top-line grower, even as the lot count has expanded by 55% over the past five years. Consequently, BTIG has adjusted its EPS estimates for NVR, reducing the 2025 forecast to $525.00 from $533.00 and the 2026 projection to $565.00 from $580.00.

The analyst concluded that the valuation of NVR appears fair, with the stock trading at 5.8 times price-to-book based on 38% forward twelve months return on equity, and 15.5 times the 2025 EPS estimate. BTIG’s ongoing Neutral stance reflects this perspective on the company’s valuation.

In other recent news, NVR Inc. has made significant strides in its corporate operations and financial performance. The company reported a third-quarter earnings per share (EPS) of $130.50, surpassing BTIG’s projection of $127.86 and aligning closely with the Factset consensus of $131.00. This positive outcome was attributed to a lower tax rate and slightly higher revenue, despite a decrease in financial services revenue and other income.

NVR Inc. also announced a $750 million stock buyback plan, demonstrating its ongoing efforts to manage its capital structure and return value to its shareholders. Furthermore, the company has updated its bylaws to allow shareholders with a continuous one-year ownership of at least 25% of NVR’s outstanding common stock to call for special meetings. This amendment is seen as a move to empower shareholders and align with their interests.

Despite facing challenges due to rising costs which led to a decline in gross profit margins, NVR reported a 5% increase in home deliveries. This resulted in a 6% year-over-year increase in consolidated revenues, reaching $2.73 billion and surpassing analyst estimates. These are among the recent developments for the company.

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