NVR, Inc. NVR is likely to generate higher earnings and homebuilding revenues in third-quarter 2024 on a year-over-year basis.

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In the last reported quarter, earnings slightly missed the Zacks Consensus Estimate, while the homebuilding revenues beat the same by 2.7%. On a year-over-year basis, earnings and homebuilding revenues increased 3.6% and 12%, respectively.

The company’s earnings topped analysts’ expectations in six of the trailing seven quarters.

Trend in Estimate Revision for NVR

For the quarter to be reported, the Zacks Consensus Estimate for earnings per share has remained stable at $132.08 over the past 60 days. The estimated figure indicates a rise of 5.4% 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 $2.66 billion, indicating an increase of 5.8% from the year-ago reported figure of $2.51 billion.

Key Factors to Note

Low-existing homes for sale have been driving demand for new homes in the market. NVR’s third-quarter Homebuilding revenues are expected to have increased from the year-ago level on these trends. 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 4.9% year over year to $2.63 billion in the to-be-reported quarter. The metric is expected to have improved from the $2.51 billion reported in the prior-year quarter. For the quarter to be reported, our model predicts the average selling price of settlements to improve 0.4% year over year to $449,700. Also, we anticipate total settlements to increase 4.5% to 5,858 units on a year-over-year basis.

From the margin perspective, high labor costs are expected to have weighed on margins to some extent. We expect the homebuilding gross margin to be 24.2%, down 10 basis points year over year.

Also, we expect selling, general and administrative expenses to increase 3.1% and operating margin to be flat year over year for the homebuilding segment.

Apart from these, our model predicts total new orders to increase 3.4% year over year to 4,910 units. The same for backlog is currently pegged at 10,649 units, which indicates a rise from 10,371 units reported a year ago. Our model predicts the value of the backlog to be $5.09 billion, implying growth from $4.8 billion in the corresponding year-ago 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 -0.62%. 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 #2.