Overview

• U.S. homebuilder's Q2 revenue fell 11% yr/yr, net income and EPS also declined

• Company cites higher lot costs, affordability challenges and weak sentiment for margin decline

• New home orders rose 9% while average sales price fell 5% yr/yr

Outlook

• Company did not provide specific guidance for future quarters or the full yr

Result Drivers

• HIGHER LOT COSTS - Co said higher lot costs negatively impacted gross profit margin in Q2

• PRICING PRESSURE & AFFORDABILITY - Co cited pricing pressure from affordability challenges and weak consumer sentiment as factors reducing margins

• LAND DEPOSIT IMPAIRMENTS - Contract land deposit impairments of about $21.7 mln reduced gross profit margin

Company press release: ID:nPnc39pva

Key Details

Metric	Beat/Miss	Actual	Consensus Estimate
Q2 Homebuilding Revenues		$2.28 bln
Q2 EPS		$83.96
Q2 Net Income		$236.46 mln

Analyst Coverage

• The current average analyst rating on the shares is "hold" and the breakdown of recommendations is 2 "strong buy" or "buy", 3 "hold" and 2 "sell" or "strong sell"

• The average consensus recommendation for the homebuilding peer group is "hold"

• Wall Street's median 12-month price target for NVR Inc is $7,200.00, about 13.4% above its July 22 closing price of $6,349.28

• The stock recently traded at 16 times the next 12-month earnings vs. a P/E of 16 three months ago

Reuters Recommended Reads

• July 21 - D.R. Horton cuts annual revenue forecast as high costs dent margins

• July 22 - PulteGroup quarterly profit falls as home affordability pressure persists

• July 21 - Forestar Q3 revenue misses amid cautious consumer sentiment

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