NVR Stock Down on Q2 Earnings Miss, Homebuilding Revenues Top

NVR, Inc. NVR reported mixed second-quarter 2024 results, with earnings missing the Zacks Consensus Estimate while Homebuilding revenues surpassed the same. On the other hand, both metrics increased on a year-over-year basis.

The upside was backed by improved demand trends, which resulted in higher settlements. Although the cancellation rate increased during the quarter, growth in new orders and increased average selling price ("ASP") of new orders are encouraging for the company's prospects.

Shares of this leading homebuilder inched down 0.5% during the Jul 23 trading session.

Inside the Numbers

The company reported earnings of $120.69 per share, which marginally missed the Zacks Consensus Estimate of $121.65 by 0.8%. The reported figure increased 3.6% from the prior-year quarter's earnings of $116.54 per share.

Segment Details

Homebuilding: The segment's revenues of $2.55 billion grew 12% from the year-ago quarter. Settlements in the quarter were up 11% year over year to 5,659 units. Our model predicted settlements to increase 8% year over year to 5,492 units. The ASP for the settlements was $450,200, flat year over year. Our estimate was in line with the reported value for the metric.

The gross margin contracted 70 basis points year over year to 23.6%. Our estimate for the metric was 24.3%.

New orders increased 3% from the prior-year quarter's levels to 6,067 units. The ASP of new orders increased 3% from the prior-year quarter's figure to $458,800. Our model predicted the ASP of new orders to increase 2.6% year over year to $458,700. The cancellation rate was 12.9%, up from 10.9% a year ago.

On a unit basis, backlog at the end of Jun 30, 2024, improved 3% from the prior-year quarter's figure to 11,597 homes and rose 6% on a dollar basis to $5.45 billion.

The average active communities were 433 during the quarter, up from 426 reported a year ago.

Mortgage Banking: Mortgage banking fees increased 18.3% year over year to $64.6 million. Mortgage closed loan production totaled $1.53 billion, up 11% year over year. The capture rate was flat year over year at 86%.

Financials

As of Jun 30, 2024, NVR had cash and cash equivalents for Homebuilding and Mortgage Banking of $2.44 billion and $31.1 million compared with $3.13 billion and $36.4 million, respectively, at 2023-end.

During the second quarter, NVR repurchased 83,168 shares for $639 million. At June 2024 end, the company had 3,090,266 shares outstanding.

Zacks Rank & Recent Peer Releases

NVR currently has a Zacks Rank #2 (Buy).

PulteGroup Inc. PHM reported stellar results for the second quarter of 2024, wherein earnings and revenues handily beat the Zacks Consensus Estimate. On a year-over-year basis, the top and bottom lines increased.

PHM saw significant benefits from key factors, which drove its success. The company's balanced operating model resulted in increases in closings, average sales price and gross margin, which collectively led to a 19.3% increase in earnings per share. Effective management of sales price, pace and starts on a community-by-community basis enabled the company to achieve high returns on invested capital and equity, evidenced by a 27.1% return on equity over the past 12 months.

D.R. Horton, Inc. DHI reported third-quarter fiscal 2024 (ended Jun 30, 2024) results, with earnings and revenues surpassing Zacks Consensus Estimate. On a year-over-year basis, both the top and bottom lines increased.

DHI now expects consolidated revenues in the range of $36.8-$37.2 billion versus the prior expectation of $36.7-$37.7 billion. The company reported $35.5 billion in revenues in fiscal 2023. Homes closed are anticipated within 90,000-90,500 units versus 89,000-91,000 units expected earlier.

KB Home KBH reported impressive results for the second quarter of fiscal 2024 (ended May 31, 2024). Both earnings and revenues beat the Zacks Consensus Estimate. Shares of this leading homebuilder rose 2.2% in the after-market trading session on Jun 18.

On an encouraging note, KB Home's earnings increased on a year-over-year basis despite a revenue decline. Leveraging the advantages of its Built to Order model, which provides buyers with choices, flexibility and affordability, the company is confident in its ability to effectively navigate potential fluctuations in housing market conditions.

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