Construction Stock Just Hit a New Low: Now What?

Shares of the homebuilder stock have decreased 30% since the start of the year

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NVR, Inc. (NYSE:NVR) is an American company that operates in two business segments: homebuilding and mortgage banking. The homebuilding segment operates in fourteen states selling and building homes under the Ryan Homes, NVHomes, and Heartland Homes names. The mortgage banking section operates under NVR Mortgage and NVR Settlement Services.

Earlier this month, NVR announced the authorization of a $500 million repurchase plan. The company indicated that the authorization is a continuation of the stock repurchase program that began in 1994. As of May 3, NVR had 3,288,055 total shares of common stock outstanding.

NVR stock price has decreased about 17% year-over-year and is currently trading down 32% since peaking at an all-time high of $5,982.45 in late December. Additionally, shares of NVR have dropped in price 29% year-to-date and have seen a 4% decline over the past month, hitting a fresh 52-week low of $3,998.00 on May 24.

Nonetheless, the company's fundamentals continue to make NVR stock a safe long-term investment with limited risk. NVR holds a healthy balance sheet with $2.14 billion in cash and $1.61 billion in total debt. The company has also managed to maintain consistent top- and bottom-line growth over multiple years. NVR's trailing 12-month revenues and net income are currently up 3.8% and 14.3%, respectively, since fiscal 2021 and have increased 29.6% and 77.4%, respectively, since fiscal 2018. NVR is also estimated to grow revenues 19% and earnings 58.6% for fiscal 2022. Furthermore, the company offers a low valuation at a forward price-earnings ratio of 9.04 and a price-sales ratio of 1.74, making NVR stock suitable for value investors.

 

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