NVR Inc. (NVR) is one of the nation’s largest homebuilding and mortgage banking companies, based in Reston, Virginia, notes David Fried, a specialist in stocks undergoing buyback and repurchase programs and the editor of The Buyback Letter.
The homebuilding unit sells and builds homes under the Ryan Homes, NVHomes, Fox Ridge Homes and Heartland Homes trade names, and operates in 34 metropolitan areas in 14 states and Washington, D.C. The company has a market cap of about $15.6 billion.
Homebuilders have had it hard lately, with supply chain and labor issues. Pressures have been large for home builders (and most other businesses, frankly): uncertainty of timing and disruption of the pandemic, governmental actions relating to that, uncertainty of the effects of economic relief efforts from the government, unemployment, consumer confidence, the changing demand for homes and the vagaries of the mortgage market have all come into play.
But housing industry analysts think we’ve spent the last decade under-building, and the expected home sales from the baby boom population has not happened (they are retiring and staying put instead of selling and moving to planned communities), which means there is simply not enough housing inventory.
So there’s an expected housing construction boom of 2022, which NVR will be a part of. Bolstering that for the whole construction industry in 2022 is President Biden's new Nov. 2021 $1.2 trillion infrastructure bill, which is part of a plan to repair infrastructure such as roads, bridges, rail networks, water systems, and airports. This investment will likely result in sustained 5-year growth and profitability for the whole construction sector.
NVR had lower-than-expected Q4 2021 results, although earnings improved from the year-ago period despite revenue decline. NVR has had strong demand for new homes, but downward pressure from supply chain issues and inflation have been challenging.
2021 earnings for the year were $320.48 per share (an increase of 39% from a year ago). Total revenues of $8.95 billion jumped 19% from 2020. In February the board authorized a $500 million repurchase, which is a continuation of the buyback program that began in 1994. In the last 12 months, management has reduced shares outstanding by 8.109%.
