Earnings Roundup: NVR, Inc. (NYSE: NVR)

On Tuesday, Shares of NVR, Inc. (NYSE: NVR) declined -2.11% to $2920.01. The stock recorded $2,915.52 as its minimum price and hit the max level of $3,024.78, during its most recent trading session. It traded total volume of 12,506 shares lower than the average volume of 35.73K shares.

NVR, Inc. (NVR), one of the nation’s leading homebuilding and mortgage banking companies, declared net income for its fourth quarter ended December 31, 2017 of $124.619M, or $28.88 per diluted share.  Net income and diluted earnings per share for the fourth quarter ended December 31, 2017 reduced 17% and 24%, respectively, when contrast to 2016 fourth quarter net income of $150.891M, or $37.80 per diluted share.  Consolidated revenues for the fourth quarter of 2017 totaled $1.816B, a 4% increase from $1.752B in the fourth quarter of 2016.

For the year ended December 31, 2017, consolidated revenues were $6.305B, an 8% increase from $5.822B stated for 2016.  Net income for the year ended December 31, 2017 was $537.521M, a boost of 26% when contrast to the year ended December 31, 2016.  Diluted earnings per share for the year ended December 31, 2017 was $126.77, a boost of 22% from $103.61 per diluted share for 2016.

Net income and diluted earnings per share for the fourth quarter and year ended December 31, 2017 were influenced by the following items:

  • The enactment of the Tax Cuts and Jobs Act in December 2017, which required a remeasurement of the Company’s deferred tax assets, resulted in a charge of $62.702M in the fourth quarter, and
  • The Company’s January 1, 2017 adoption of Accounting Standard Update 2016-09, which resulted in the Company recognizing an income tax benefit of $13.960M and $58.681M related to excess tax benefits from stock option exercises during the fourth quarter and year ended December 31, 2017, respectively.  For the fourth quarter and year ended December 31, 2016, the excess tax benefits of $2.712M and $13.661M, respectively, were recorded to additional paid-in capital within shareholders’ equity on the consolidated balance sheet.

Homebuilding

New orders in the fourth quarter of 2017 increased 18% to 4.306K units, when contrast to 3.645K units in the fourth quarter of 2016. The average sales price of new orders in the fourth quarter of 2017 was $380.80K, a decrease of 4% when contrast with the fourth quarter of 2016.  The decrease in the average sales price of new orders is mainly attributable to a shift in new orders to lower priced markets and lower priced products.  Settlements increased in the fourth quarter of 2017 to 4.630K units, 5% higher than the fourth quarter of 2016.  The Company’s backlog of homes sold but not settled as of December 31, 2017 increased on a unit basis by 24% to 8.531K units and increased on a dollar basis by 21% to $3.277B when contrast to December 31, 2016.

Homebuilding revenues in the fourth quarter of 2017 totaled $1.781B, 4% higher than the year earlier period.  Gross profit margin in the fourth quarter of 2017 increased to 19.3%, contrast to 17.8% in the fourth quarter of 2016.  Gross profit margin was favorably influenced by modest improvements in pricing combined with moderating construction costs.  Income before tax from the homebuilding segment totaled $241.800M in the fourth quarter of 2017, a boost of 16% when contrast to the fourth quarter of 2016.

New orders for the year ended December 31, 2017 increased 13% to 17.608K units, when contrast to 15.583K units in 2016.  Settlements increased 7% year over year to 15.961K units in 2017 from 14.928K units in 2016.  Homebuilding revenues for the year ended December 31, 2017 totaled $6.175B, which is 8% higher than 2016.  Gross profit margin for the year ended December 31, 2017 was 19.2%, contrast to 17.5% in 2016.  Income before tax for the homebuilding segment for the year ended December 31, 2017 was $776.370M, a 29% increase when contrast to 2016.

Mortgage Banking

Mortgage closed loan production in the fourth quarter of 2017 totaled $1.229B, a boost of 2% when contrast to the fourth quarter of 2016.  Income before tax from the mortgage banking segment totaled $19.518M in the fourth quarter of 2017, a decrease of 4% when contrast to $20.399M in the fourth quarter of 2016.  The decrease is because of higher general and administrative costs in the fourth quarter of 2017.

Mortgage closed loan production for the year ended December 31, 2017 increased 7% to $4.229B. Income before tax from the mortgage banking segment for the year ended December 31, 2017 increased 16% to $70.541M from $60.595M in 2016.

NVR has the market capitalization of $11.34B and its EPS growth ratio for the past five years was 32.20%. The return on assets ratio of the Company was 18.40% while its return on investment ratio stands at 28.30%. Price to sales ratio was 1.79 while 80.50% of the stock was owned by institutional investors.

 I am Wayne Parsons and I have over 16 years experience in the financial services industry giving me a vast understanding of how news affects the financial markets. I am an active day trader spending the majority of my time analyzing earnings reports and watching commodities and derivatives. I have a Masters Degree in Economics from Westminster University with previous roles counting Investment Banking.

Email: wayne.parsons@nasdaqexpress.com

Wayne Parsons

 I am Wayne Parsons and I have over 16 years experience in the financial services industry giving me a vast understanding of how news affects the financial markets. I am an active day trader spending the majority of my time analyzing earnings reports and watching commodities and derivatives. I have a Masters Degree in Economics from Westminster University with previous roles counting Investment Banking.Email: wayne.parsons@nasdaqexpress.com