NVR, Inc.'s (NYSE:NVR) second-quarter 2022 earnings and revenues are expected to have increased on a year-over-year basis, courtesy of higher pricing.
In the last reported quarter, the top and bottom lines beat the respective Zacks Consensus Estimate. On a year-over-year basis, earnings increased 84%. Total revenues (Homebuilding & Mortgage Banking fees combined), however, grew 17% on a year-over-year basis.
NVR has a strong earnings surprise history, having surpassed analysts' expectations in 11 of the trailing 14 quarters.
Trend in Estimate Revision
For the quarter to be reported, the Zacks Consensus Estimate for earnings per share has remained stable at $137.54 over the past 60 days. The estimated figure indicates an increase of 66.8% from the year-ago quarter. The consensus mark for revenues is pegged at $2.61 billion, suggesting a 17.2% increase from the year-ago reported figure of $2.22 billion.
NVR, Inc. Price and EPS Surprise
NVR, Inc. price-eps-surprise | NVR, Inc. Quote
Key Factors to Note
NVR's quarterly results are likely to be impressive, given lower lumber prices and higher average price of settlements. The company's second-quarter Homebuilding revenues (accounting for more than 97% of total revenues) are expected to have increased from the year-ago level, backed by a shortage of previously owned houses in the market. Also, the rising trend of working from home, owing to the coronavirus outbreak, has been prompting many families to live in lower-cost and low-density communities, thereby boosting demand.
However, inflationary pressures have been a cause of concern. The companies in the industry have been experiencing significant material cost inflation along with escalating land, labor and material costs. Also, the adverse effects of tightening global and domestic supply chains may have been a concern.
NVR has been successfully raising prices to offset inflationary pressures. The company has been undertaking additional steps to counter cost pressure and incremental tariffs, which are expected to reflect on the bottom line.
The Zacks Consensus Estimate for Homebuilding revenues is pegged at $2.61 billion, which indicates an increase from $2.23 million a year ago.
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.
Earnings ESP: The company has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
Zacks Rank: NVR carries a Zacks Rank #4 (Sell).
Stocks With Favorable Combination
Here are some companies in the Zacks Construction sector, which according to our model have the right combination of elements to post an earnings beat in their respective quarters to be reported.
Armstrong World Industries, Inc. (NYSE:AWI) has an Earnings ESP of +1.02% and a Zacks Rank #3.
AWI's earnings topped the consensus mark twice but missed the same on the other two occasions, with the average negative surprise being 0.2%. Earnings for the to-be-reported quarter are expected to grow 19% year over year.
UFP Industries, Inc. (NASDAQ:UFPI) has an Earnings ESP of +3.87% and a Zacks Rank #3.
UFPI's earnings topped the consensus mark in all the last four quarters, with the average surprise being 47.7%. Earnings for the to-be-reported quarter are expected to decline 14.2% year over year.
KBR, Inc. (NYSE:KBR) has an Earnings ESP of +1.56% and a Zacks Rank #1.
KBR's earnings topped the consensus mark in all the last four quarters, with the average being 12%. Earnings for the to-be-reported quarter are expected to grow 10.3% year over year.
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