NVR Gears Up to Report Q1 Earnings: What's in Store for the Stock?

NVR, Inc. NVR is expected to report lower earnings in first-quarter 2025. Homebuilding revenues are likely to have increased on a year-over-year basis.

In the last reported quarter, earnings and the homebuilding revenues beat the Zacks Consensus Estimate by 10.7% and 3.3%, respectively. On a year-over-year basis, earnings and homebuilding revenues increased 15% and 16%, respectively.

The company’s earnings beat the consensus mark in two of the last four quarters and missed on the other two occasions, the average surprise being 4.6%. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

Trend in Estimate Revision for NVR

The Zacks Consensus Estimate for the to-be-reported quarter’s EPS has decreased to $107.87 from $108.23 in the past seven days. The estimated figure indicates a 7.3% decrease from the year-ago EPS of $116.41.

NVR, Inc. Price and EPS Surprise

NVR, Inc. price-eps-surprise | NVR, Inc. Quote

The consensus mark for revenues is pegged at $2.37 billion, indicating an increase of 3.9% from the year-ago reported figure of $2.29 billion.

Factors Likely to Shape NVR’s Q1 Results

Despite ongoing affordability challenges from high mortgage rates, NVR’s first-quarter Homebuilding revenues are expected to have grown year over year, as homebuyers adjust to the new elevated mortgage rate benchmark. The company is likely to have benefited from an increase in settlements, a rise in average selling price and stronger new order volumes. Also, a strong business model and its strategy of acquiring finished building lots are likely to have aided the company’s performance to some extent.

Our model predicts Homebuilding revenues (which accounted for 97.8% of total revenues in 2024) to grow 4.8% year over year to $2.4 billion in the to-be-reported quarter. For the quarter to be reported, our model predicts the average selling price of settlements to improve 1.2% year over year to $454,400. Also, we anticipate total settlements to increase 3.6% to 5,271 units on a year-over-year basis.

The company's bottom line is expected to have decreased year over year in the quarter, due to higher building materials and labor costs. We expect the homebuilding gross margin to be 22%, down 250 basis points year over year. Also, selling, general and administrative expenses are expected to increase 2% year over year for the homebuilding segment.

Our model predicts total new orders to increase 8.7% year over year to 6,577 units. The backlog is currently pegged at 11,259 units, which indicates a rise from 11,189 units reported a year ago. We expect the value of the backlog to be $5.42 billion, implying growth from $5.22 billion in the corresponding year-ago quarter.

What the Zacks Model Unveils for NVR

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.

NVR’s Earnings ESP: The company has an Earnings ESP of -1.62%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

NVR’s Zacks Rank: NVR currently carries a Zacks Rank #4 (Sell).

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.

MasTec, Inc. MTZ has an Earnings ESP of +0.85% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

MTZ’s earnings beat estimates in each of the last four quarters, the average surprise being 31.6%. The company’s earnings for the quarter to be reported are expected to increase 361.5%.

Meritage Homes Corporation MTH currently has an Earnings ESP of +0.62% and a Zacks Rank of 3.

MTH’s earnings beat estimates in each of the last four quarters, the average surprise being 46.1%. The company’s earnings for the quarter to be reported are expected to decrease 32.4%.

Martin Marietta Materials, Inc. MLM currently has an Earnings ESP of +4.48% and a Zacks Rank of 3.

MLM’s earnings beat estimates in two of the last four quarters and missed twice, the average negative surprise being 1.7%. The company’s earnings for the quarter to be reported are expected to decrease 4.7%.

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This article originally published on Zacks Investment Research (zacks.com).

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