A month has gone by since the last earnings report for NVR (NVR Quick QuoteNVR - Free Report) . Shares have lost about 4.1% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is NVR due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

NVR's Q4 Earnings & Revenues Beat Estimates

NVR reported fourth-quarter 2022 results, wherein this homebuilding and mortgage banking company’s earnings and revenues beat the Zacks Consensus Estimate.

Inside the Numbers

The company reported earnings of $133.44 per share, which surpassed the consensus mark of $104.10 by 28.2%. The reported figure increased 49.8% from the prior-year quarter’s figure of $89.09 per share.

Total revenues (Homebuilding & Mortgage Banking fees combined) amounted to $2.71 billion for the reported quarter, reflecting growth of 22% on a year-over-year basis.

Segment Details

Homebuilding: Revenues in the segment totaled $2.67 billion, up 23% from the year-ago quarter’s levels. The metric also topped the consensus estimate of $2.51 billion by 6.2%. Settlements in the quarter were up 13% year over year to 5,749 units. The average selling price or ASP was $464,000, up 9% year over year.

Gross margin improved 90 basis points (bps) to 25.3%, driven by higher revenues.

New orders in the quarter were down 27% from the prior-year quarter’s levels to 4,153 units. The average sales price of new orders rose 1% from the prior-year quarter’s figure to $459,000. The cancellation rate was 18% for the quarter, up from 10% a year ago. Average active communities totaled 428, up from 418 reported in fourth-quarter 2021.

As of Dec 31, 2022, backlog (on a unit basis) declined 28% to 9,162 units from the prior-year quarter and fell 25% (on a dollar basis) to $4.33 billion.

Mortgage Banking: Mortgage banking fees plunged 17.5% year over year to $44.1 million. Mortgage closed loan production totaled $1.52 billion, up 3% year over year. The capture rate was 80% for the fourth quarter, down from 89% a year ago.

2022 Highlights

Total revenues of $10.3 billion increased 18.7% from the 2021 level. Homebuilding revenues totaled $10.33 billion, reflecting an increase of 19% from 2021. Settlements grew 6% to 22,732 units. Gross margin improved 350 bps to 25.8%. Earnings grew 53.5% to $491.82 per share from $320.48 per share a year ago.

New orders for 2022 dropped 16% to 19,164 units from 22,721 units in 2021.

Financials

As of Dec 31 2022, NVR had cash and cash equivalents for Homebuilding and Mortgage Banking of $2.5 billion and $19.4 million compared with $2.55 billion and $28.4 million, respectively, at 2021-end.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.

The consensus estimate has shifted 57.98% due to these changes.

VGM Scores

Currently, NVR has a great Growth Score of A, a grade with the same score on the momentum front. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

NVR has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.