NVR Is Set to Report Q2 Earnings: What's in Store for the Stock?

Core Insights - NVR, Inc. is anticipated to report lower earnings and homebuilding revenues in Q2 2025 due to soft demand, high inventories, and margin pressures [1][10] Financial Performance - The Zacks Consensus Estimate for NVR's Q2 EPS has decreased to $106.33, reflecting an 11.9% decline from the previous year's EPS of $120.69 [3] - Revenue estimates for the quarter are set at $2.40 billion, indicating a 5.8% decrease from the year-ago figure of $2.55 billion [3][10] - In the last reported quarter, NVR's earnings and homebuilding revenues missed the Zacks Consensus Estimate by 12.1% and 1%, respectively [1] Market Conditions - The homebuilding industry is experiencing ongoing softness, with the spring 2025 selling season underperforming due to affordability issues and weakened consumer confidence [4] - High and fluctuating mortgage rates, along with economic uncertainties, have negatively impacted homebuyer activity during the peak sales period [4] Revenue and Settlement Predictions - Homebuilding revenues are expected to decline by 5.6% year-over-year to $2.4 billion, with the average selling price of settlements projected to decrease by 1.5% to $443,500 [5] - Total settlements are anticipated to drop by 4.2% to 5,422 units year-over-year [5] Cost and Margin Outlook - The company's gross margin for homebuilding is expected to decrease to 22.1%, down 150 basis points from the previous year [6][10] - Selling, general, and administrative expenses are projected to rise by 2.7% year-over-year for the homebuilding segment [6][10] Order and Backlog Trends - Total new orders are predicted to increase by 3.6% year-over-year to 6,287 units, while the backlog is expected to decline to 11,030 units from 11,597 units reported a year ago [7] - The value of the backlog is estimated to be $5.3 billion, down from $5.45 billion in the same quarter last year [7] Earnings Prediction Model - The current model does not predict an earnings beat for NVR, as it lacks the necessary combination of a positive Earnings ESP and a favorable Zacks Rank [8] - NVR has an Earnings ESP of +3.25% [9]