NVR Inc (NVR, Financial) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at $7,692, NVR Inc has witnessed a daily gain of 0.46%, marked against a three-month change of 8.37%. A thorough analysis, underlined by the GF Score, suggests that NVR Inc is well-positioned for substantial growth in the near future.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 9/10
- Profitability rank: 10/10
- Growth rank: 10/10
- GF Value rank: 3/10
- Momentum rank: 9/10
Each one of these components is ranked and the ranks also have positive correlation with the long term performances of stocks. The GF score is calculated using the five key aspects of analysis. Through backtesting, we know that each of these key aspects has a different impact on the stock price performance. Thus, they are weighted differently when calculating the total score. With high ranks in financial strength, profitability, and growth, but a lower GF Value rank, GuruFocus assigned NVR Inc the GF Score of 94 out of 100, which signals the highest outperformance potential.
Understanding NVR Inc Business
NVR Inc is a United States-based homebuilding company with a market cap of $24.6 billion and sales of $9.53 billion. The company operates with an impressive operating margin of 20.47% and is known for building single-family detached homes, townhomes, and condominium buildings under three brands: Ryan Homes, NVHomes, and Heartland Homes. In addition to its homebuilding segment, NVR Inc also provides mortgage banking and title services through its subsidiary, covering four geographic areas of the United States: Mid-Atlantic, North East, Mid-East, and South East.
Financial Strength Breakdown
According to the Financial Strength rating, NVR Inc's robust balance sheet exhibits resilience against financial volatility, reflecting prudent management of capital structure. The Interest Coverage ratio for NVR Inc stands impressively at 70.36, underscoring its strong capability to cover its interest obligations. This robust financial position resonates with the wisdom of legendary investor Benjamin Graham, who favored companies with an interest coverage ratio of at least 5. With an Altman Z-Score of 12.69, NVR Inc exhibits a strong defense against financial distress, highlighting its robust financial stability. With a favorable Debt-to-Revenue ratio of 0.11, NVR Inc's strategic handling of debt solidifies its financial health.
Profitability Rank Breakdown
The Profitability Rank shows NVR Inc's impressive standing among its peers in generating profit. NVR Inc's Operating Margin has increased to 20.47% in 2023, up from 14.17% in 2019. Furthermore, the company's Gross Margin has also seen a consistent rise over the past five years, indicating growing proficiency in transforming revenue into profit. NVR Inc's strong Predictability Rank of 5.0 stars out of five underscores its consistent operational performance, providing investors with increased confidence.
Growth Rank Breakdown
Ranked highly in Growth, NVR Inc demonstrates a strong commitment to expanding its business. The company's 3-Year Revenue Growth Rate is 12.9%, which outperforms 68.63% of companies in the Homebuilding & Construction industry. Moreover, NVR Inc has seen a robust increase in its earnings before interest, taxes, depreciation, and amortization (EBITDA) over the past few years, with a three-year growth rate of 25.4 and a five-year rate of 23.3. This trend accentuates the company's continued capability to drive growth.
Next Steps
Considering NVR Inc's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential outperformance. The company's strategic approach to managing its capital structure, its ability to generate profits efficiently, and its consistent growth trajectory make it a compelling choice for investors looking for market-leading performance. With a GF Score of 94, NVR Inc stands out as a strong contender in the homebuilding industry, promising a bright future for its shareholders.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
