NVR, Inc.

Analysis of NVR Stock

Technical Perspective NVR shows moderate resilience despite recent short-term pressure, trading in the lower-middle portion of its 52-week range. The stock's beta of 1.035 aligns with market volatility, and while not deeply oversold, current levels offer reasonable valuation support after a pullback from recent peaks.

Fundamental Strength NVR exhibits robust financial health, with strong revenue growth, a net profit margin of 13.4%, and low debt levels. High liquidity, ample cash reserves, and efficient operational metrics—such as a return on equity of 9.4%—underscore its disciplined management and stability in the housing sector.

Valuation Considerations The trailing PE of 15.47 appears reasonable, but the elevated PEG ratio of 1.79 indicates a premium for expected growth. Key multiples like EV/EBITDA (41.78) and Price-to-Book (5.36) suggest a rich valuation, though definitive industry comparisons are limited without peer benchmarks.

Risk Assessment Systematic risk is in line with the market, supported by negligible short interest and strong investor sentiment. However, sector-specific risks, including sensitivity to interest rates and housing demand cycles, remain relevant factors for potential investors.

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Investment Recommendation

NVR presents a compelling case based on its solid fundamentals, strong balance sheet, and efficient operations. While the valuation appears elevated on certain metrics, the stock’s resilience and reasonable entry point after recent weakness offer a balanced risk-reward profile. For investors seeking exposure to a well-managed homebuilder with growth potential, NVR is worth considering, though close monitoring of housing market trends is advised.

*Note: This is not investment advice, for reference only.*

RockFlow Model Forecast: Three Scenarios for 2026

Based on the provided analysis, here is a 12-month outlook for NVR:

The primary catalysts for NVR over the next year are its exceptionally strong financial health—including robust revenue growth, high profit margins, and a low-debt balance sheet—which positions it to capitalize on any stability or improvement in the housing market. Key risks are predominantly external, specifically the stock's sensitivity to rising interest rates and a potential slowdown in housing demand, which could pressure its current premium valuation. Given the absence of a specific analyst target, the outlook is cautiously optimistic; the stock's resilience and reasonable entry point after its pullback suggest potential for mid-single-digit to low-double-digit percentage appreciation, contingent on stable macroeconomic conditions for the housing sector.

Wall Street Consensus

Most Wall Street analysts are optimistic about NVR, Inc.'s 12-month outlook, with consensus target around $7526.14, indicating expected upside potential.

Overall, NVR has investment potential but also faces challenges. Here are key factors to weigh before investing.

NVR has demonstrated moderate performance with slight recent weakness but maintains relative strength against the market. The stock experienced a 1-year maximum drawdown of -17.22%, reflecting meaningful volatility consistent with its beta of 1.035.

Short-term performance shows recent pressure with a 1-month decline of -2.65%, though the 3-month gain of 1.64% coupled with 1.66% relative outperformance versus the market indicates resilience. This mixed picture suggests normal consolidation after earlier strength rather than significant deterioration.

Currently trading at $7,421, NVR sits approximately 35% above its 52-week low but 14% below its high, positioning it in the lower-middle portion of its annual range. While not deeply oversold, the current level appears to offer reasonable valuation support after the recent pullback from peak levels.

NVR demonstrates solid revenue growth and profitability, with Q4 2025 revenue reaching $2.71 billion compared to $2.51 billion in Q3. The company maintains strong profitability metrics, evidenced by a net profit margin of 13.4% and operating margin of 16.5% in the latest quarter. These margins reflect efficient cost management despite slight compression from the previous quarter's gross profit ratio of 23.5% to 22.7%.

The company exhibits exceptional financial health, with a low debt-to-equity ratio of 0.31 and minimal long-term debt comprising just 21.4% of capitalization. NVR maintains robust liquidity with a current ratio of 3.95 and substantial cash reserves of $691 per share, providing significant financial flexibility. The interest coverage ratio of 62x indicates ample capacity to service existing debt obligations.

Operational efficiency remains strong, with return on equity at 9.4% and return on assets of 6.2%. The company demonstrates effective asset utilization through an asset turnover ratio of 0.46 and fixed asset turnover of 11.0. Inventory management appears efficient with 74 days of inventory outstanding, supporting healthy cash conversion cycle metrics.

Valuation Level: NVR's current trailing PE of 15.47 and forward PE of approximately 14.2 suggest a reasonable valuation based on traditional earnings multiples. However, the stock appears significantly overvalued when considering its elevated PEG ratio of 1.79, which exceeds the preferred threshold of 1.0, indicating investors are paying a substantial premium for expected earnings growth.

Peer Comparison: A definitive peer comparison cannot be established as industry average data is unavailable. Nevertheless, the exceptionally high EV/EBITDA of 41.78 and Price-to-Book ratio of 5.36 suggest NVR trades at a premium to typical asset-intensive or capital-intensive businesses. Further analysis would require specific homebuilding or construction industry benchmarks for proper context.

Volatility Risk: NVR's beta of 1.035 indicates its price volatility is nearly identical to the broader market, presenting a standard level of systematic risk. The stock demonstrated moderate resilience with a one-year maximum drawdown of -17.22%, which is not atypical for the housing sector during periods of economic uncertainty but suggests investors should be prepared for potential double-digit declines.

Other Risks: The absence of short interest implies a strong consensus among investors regarding the company's fundamental stability and positive outlook, significantly reducing the risk of a short squeeze or bearish sentiment driving the price. Investors should, however, remain cognizant of sector-specific risks such as interest rate sensitivity and cyclical demand in the homebuilding industry, which are not captured by these metrics.