Why NVR (NVR) Stock Is Tumbling Today

NEW YORK (TheStreet) -- NVR Inc (NVR) shares are down 4.5% to $1,066.80 in trading on Monday following the release of the company's first quarter earnings report.

The U.S. home builder reported a net income of $23.85 million, or $5.16 per diluted share for the quarter ending March 31, missing analysts average EPS estimate of $10.02 per share.

Consolidated revenues for the quarter totaled $811.31 million, a 5% increase from the year over year quarterly total of $770.26 million.  Revenue for the quarter also fell short of analyst consensus estimate of $866.79 million.

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TheStreet Ratings team rates NVR INC as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate NVR INC (NVR) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, impressive record of earnings per share growth and compelling growth in net income. We feel these strengths outweigh the fact that the company shows low profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • NVR's revenue growth has slightly outpaced the industry average of 27.9%. Since the same quarter one year prior, revenues rose by 31.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The current debt-to-equity ratio, 0.48, is low and is below the industry average, implying that there has been successful management of debt levels.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Household Durables industry and the overall market, NVR INC's return on equity exceeds that of both the industry average and the S&P 500.
  • NVR INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, NVR INC increased its bottom line by earning $55.77 versus $35.18 in the prior year. This year, the market expects an improvement in earnings ($70.94 versus $55.77).
  • The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Household Durables industry average. The net income increased by 61.3% when compared to the same quarter one year prior, rising from $60.63 million to $97.81 million.
  • You can view the full analysis from the report here: NVR Ratings Report
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