NVR, Inc. (NVR): what the price requires
At today's price, NVR, Inc. (NVR) is priced for +8.8% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/NVR
Headline
| Field | Value |
|---|---|
| Ticker | NVR |
| Company | NVR, Inc. |
| Current price | $6427.11/sh |
| Composition | Homebuilding Mid Atlantic 42% / Homebuilding North East 12% / Homebuilding Mid East 18% / Homebuilding South East 26% / Mortgage Banking 2% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Implied growth | 8.8% |
| Multiple paid | 16x operating income |
Solve inputs: computed at a 9.3% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~5.2pp.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | -0.03σ |
| cohort percentile (of 210 peers) | 41 |
| implied end-window share | 0% |
Valuation X-Ray
The price is supported by asset-based and relative-multiple value, while earnings-power/growth-DCF land below the price. A value/asset-supported name, not a pure growth bet.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 1.15x | 4 | expensive |
| Earnings | 1.61x | 4 | expensive |
| Relative | 0.82x | 2 | justifies |
| Growth | 1.87x | 3 | expensive |
Families that justify the price: Asset, Relative Families that call it expensive: Earnings, Growth
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.9%); the inversion above states its own rate.
Per-Model Detail (n=13)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $3435.06 | 1.87x | yes | FCF base $1.2B, growth -8% (input: historical growth), terminal g 0.5%, WACC 8.9%, 5yr projection |
| DCF Exit Multiple | Growth | $6097.01 | 1.05x | yes | Exit EV/EBITDA: 2975.0x / 2977.0x / 2979.0x (bear / base = today's held flat / bull), 5yr |
| Relative Valuation | Relative | $7370.64 | 0.87x | yes | P/E 18x (static sector reference · 2026-04), scenarios: 15.3x / 18.0x / 20.7x (bear / base = reference held flat / bull), EV/EBITDA 26.4x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $4573.83 | 1.41x | yes | BV/sh $1193.49, ROE (TTM) 35.4%, ke 9.3% |
| Two-Stage Excess Return | Asset | $9594.60 | 0.67x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $3146.28 | 2.04x | yes | Rev $9.8B, growth -8% (input: historical growth; tapered), Terminal P/S: 1.6x / 1.9x / 2.2x (bear / base = today's held flat / bull, cap 8x) |
| Growth-Adjusted P/E | Relative | — | — | no | — |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | — | — | no | — |
| Residual Income | Asset | $7138.77 | 0.90x | yes | BV $1193.49 + 5yr PV of (ROE (TTM) 35.4% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $3316.02 | 1.94x | yes | √(22.5 × EPS $409.48 × BVPS $1193.49) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $0.01 | 642711.00x | yes | EBITDA $0.01B × sector EV/EBITDA 12.0x (excluded from median) |
| FCF Yield | Earnings | $4116.72 | 1.56x | yes | FCF $1230.9M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $3880.49 | 1.66x | yes | SBC-adj FCF $1.17B (FCF $1.23B − SBC $0.06B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $343.18 | 18.73x | yes | EPS $409.48 × (8.5 + 2×-5.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | — | — | no | — |
| P/Sales Sector | Relative | $8370.38 | 0.77x | yes | Revenue $9.80B × sector P/S 2.5x |
| PEG Fair Value | Relative | — | — | no | — |
| Earnings Yield | Earnings | $4426.81 | 1.45x | yes | EPS $409.48 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Share count CAGR (buyback) | -5.4% |
| Burning cash | no |
Operating profit is negative or near zero and the company has no demonstrated through-cycle (mid-cycle) operating margin to normalize against, so years-to-repay cannot be computed honestly.
Operating profit is negative or near zero and there is no demonstrated through-cycle (mid-cycle) operating margin to normalize against, so interest coverage cannot be computed honestly.
Bullet Takeaways
- NVR builds homes without owning the land beneath them, controlling lots through option deposits rather than buying land outright, which gives it far higher returns on capital and far lower risk than a typical homebuilder.
- The clearest near-term risk is the housing cycle: Q1 2026 net income fell 34% to $198.4 million as homebuilding revenue dropped 22% and gross margin compressed to 19.6% from 21.9% on pricing pressure and higher lot costs.
- Watch new orders against settlements: orders rose 7% year over year even as closings fell, and the company keeps shrinking its share count, down more than 5% a year, through aggressive buybacks.
Bull Case
What a standard homebuilder valuation misses about NVR is that it is barely a land business at all. Most builders tie up enormous capital buying and holding land for years, which makes them deeply cyclical and capital-hungry. NVR does the opposite: it controls lots through options and deposits, then buys each finished lot only when it is ready to build on it. The 10-K quantifies the discipline, describing roughly 10,700 controlled lots held through cash deposits and letters of credit, with properties "controlled with cash deposits" rather than owned outright. The deposit is the only capital at risk, so a downturn costs NVR a forfeited deposit rather than a balance sheet full of underwater land.
That structure is the entire engine of the company's superior economics. Because it carries little land inventory, NVR earns far higher returns on capital than peers and stays cash-generative even when volumes fall. The segment reporting even charges each operating segment a "corporate capital allocation" based on average net assets employed, a sign that capital efficiency is managed as the core discipline rather than an afterthought. Net debt is minimal, running well under a single year of operating income, so the company has none of the leverage that turns a housing slowdown into a crisis for ordinary builders.
The capital return is the proof of the model's cash generation. NVR has shrunk its share count by more than 5% a year through relentless buybacks, which is why each remaining share commands a price in the thousands. In a soft quarter, the demand signal still held: new orders rose 7% year over year to 5,738 units and the cancellation rate improved to 14% from 16%. The bull case is that the asset-light model lets NVR compound book value and earnings per share through the cycle while competitors absorb the land risk, and the asset-based methods recognize that by supporting the price.
Bear Case
The valuation methods disagree on NVR, and the split is the bear's clearest framing. The asset-based and relative-multiple methods support the price, but the earnings-power and growth-based methods read it as expensive, sitting well above where each lands. The conservative methods are usually the more honest read for a cyclical, and here they are flashing caution: paying for NVR on its current earnings power assumes those earnings hold, and the most recent quarter says they are falling.
The quarter laid the cyclical risk bare. Q1 2026 net income dropped 34% to $198.4 million and diluted EPS fell 29% to $67.76, as consolidated revenue declined 22% to $1.88 billion. The cause was a classic homebuilder squeeze from both sides: a lower opening backlog constrained how many homes NVR could settle, while gross margin compressed to 19.6% from 21.9% on pricing pressure and higher lot costs. The asset-light model protects the balance sheet, but it does not insulate NVR from the price and volume of homes themselves. When buyers pull back on affordability and lot costs rise, the margin gives way regardless of how the land is financed.
The forward picture carries the same tension. New orders rose 7%, which is encouraging, but the dollar value of backlog fell 3% to $4.7 billion even as the unit count held roughly flat, meaning the homes in the pipeline are worth less per unit. That is pricing pressure showing up in the order book, not just the income statement. Solvency is emphatically not the concern here, with net debt under a year of operating income and a model built to weather downturns, so this is not a balance-sheet bear. It is an earnings-durability bear: the growth and earnings methods say the price already credits a recovery in margins and volumes, and if the affordability-driven slowdown persists, the value methods that look supportive today reset lower as the earnings they rest on decline.
Valuation
NVR is a value-and-asset-supported name rather than a growth bet, and the methods split cleanly along that line. The asset-based and relative-multiple methods support the price, while the earnings-power and growth-based methods read it as expensive, landing well above the level the price implies. The pattern says the market is paying for the company's capital efficiency and book value rather than for accelerating earnings, which is the right way to read a homebuilder at a soft point in the cycle.
The inversion sharpens the bet. At today's price, the implied growth is around 10% on an operating margin near 5.5%, against a trailing operating margin around 9.6%. In other words, the price does not require NVR to expand its margin; it requires the company to keep growing modestly while sustaining roughly the profitability it already shows, even as the most recent quarter saw homebuilding gross margin compress to 19.6%. The asset-light, option-based land model is what makes that durable: it lets NVR earn high returns on a small capital base and stay cash-generative through downturns, which is precisely what the asset-based methods are crediting. The right peer set is the homebuilder cohort, but NVR's capital structure makes its returns and risk profile genuinely different from land-heavy peers.
Solvency is a defining strength and bounds the downside firmly. Net debt of about $600 million runs only around 0.64 times operating income, and the model's reliance on lot options rather than owned land means the company has very little capital trapped in a falling market. The share count has fallen more than 5% a year, direct evidence of the cash return that has long defined the stock. The decisive variable is the housing cycle itself: the value methods support the price as long as orders and margins stabilize. If affordability pressure and lot-cost inflation keep compressing margins, the earnings the price rests on fall, and the supportive-looking multiple resets with them.
Catalysts
The Q1 2026 report in May was a clear earnings miss that reflected the housing slowdown. Net income fell 34% to $198.4 million and diluted EPS dropped 29% to $67.76, with consolidated revenue down 22% to $1.88 billion and homebuilding revenue down 22% to $1.83 billion. The decline came from a lower opening backlog that limited settlements, compounded by gross margin compressing to 19.6% from 21.9% on pricing pressure and elevated lot costs. The market took the miss poorly.
The forward indicators were more mixed, and they are the catalysts to watch. New orders rose 7% year over year to 5,738 units and the cancellation rate improved to 14% from 16%, both signs that demand has not collapsed even as closings fell. But backlog told a cautionary story: the unit count held roughly flat at 10,171 while the dollar value fell 3% to $4.7 billion, meaning the pipeline is being built at lower prices per home. The pace of orders, the direction of lot costs, and the trajectory of mortgage rates are the variables that will determine whether margins stabilize or keep eroding.
Analyst opinion is split, which fits a cyclical at an inflection. The current month showed 3 Buy, 6 Hold, and 1 Sell ratings with an average price target around $7,070, but the bullish firms are well above the stock: BofA raised its target to $8,600 with a Buy, and BTIG initiated coverage at Buy with a $9,022 target, against a low estimate near $5,664. The next several quarters of orders and margins, set against the broader path of housing affordability, are the developments most likely to move the stock.
Peer Cohorts (Per Segment, With Filing Citations)
Homebuilding Mid Atlantic / Homebuilding North East +2 more (reported)
- DHI (D.R. Horton, Inc.)
- (no filing in the citation store)
- LEN (LENNAR CORP /NEW/)
- (no filing in the citation store)
- PHM (PULTEGROUP, INC.)
- (no filing in the citation store)
- TOL (Toll Brothers, Inc.)
- (no filing in the citation store)
- KBH (KB HOME)
- (no filing in the citation store)
- TMHC (Taylor Morrison Home Corp)
- (no filing in the citation store)
- TPH (Tri Pointe Homes, Inc.)
- (no filing in the citation store)
- MHO (M/I HOMES, INC.)
- (no filing in the citation store)
Mortgage Banking (reported)
- RKT (Rocket Companies, Inc.)
- (no filing in the citation store)
- UWMC (UWM HOLDINGS CORPORATION)
- (no filing in the citation store)
- PFSI (PennyMac Financial Services, Inc.)
- (no filing in the citation store)
- WD (Walker & Dunlop, Inc.)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
NVR FY2024 10-K · NVR Q1 2026 results, May 2026 · analyst notes via Investing.com and Public.com, 2026