A Look At NVR (NVR) Valuation After Recent Share Price Moves And Mixed Signals From P/E And DCF

NVR (NVR) continues to trade actively after recent moves in its share price, with the stock closing at US$7,623.76. That puts fresh attention on how its returns and fundamentals currently line up.

See our latest analysis for NVR.

Zooming out, NVR’s recent pullback sits against a year-to-date share price return of 4.74% and a 1-year total shareholder return decline of 6.35%. The 3-year total shareholder return of 41.03% points to longer term momentum that has been stronger than the recent trend.

If NVR’s moves have you rethinking where growth could come from next, this can be a good moment to widen your search and check out fast growing stocks with high insider ownership.

So with NVR trading around US$7,623.76, a value score of 1, a market price below one analyst price target, and recent softness in revenue and net income, is there still a buying opportunity here, or is potential future growth already reflected in the current price?

Preferred P/E of 16.2x: Is it justified?

On a P/E basis, NVR trades at 16.2x earnings, which sits above the Consumer Durables industry average of 11.2x and also above its peer average of 14.6x.

The P/E ratio compares the current share price to earnings per share and is a common way investors look at what they are paying for each dollar of profit. For a homebuilder like NVR, this can reflect how the market weighs its earnings track record, return profile, and expectations for future profitability.

Here, the higher P/E comes alongside several pieces of context. NVR is described as expensive versus both the industry and peer averages, and the estimated fair P/E of 14.8x is lower than the current 16.2x level. At the same time, the SWS DCF model suggests the share price of $7,623.76 is trading 14.5% below its estimated future cash flow value of $8,914.11, and the company has a high Return on Equity of 34.7% with what is described as high quality earnings.

Relative to the broader Consumer Durables group, the current 16.2x P/E is meaningfully richer than the 11.2x industry benchmark and the 14.6x peer average. This points to investors paying a premium multiple. Compared with the estimated fair P/E of 14.8x, it also sits above the level the market could move towards if pricing aligned with that fair ratio.

Explore the SWS fair ratio for NVR

Result: Price-to-Earnings of 16.2x (OVERVALUED)

However, recent revenue and net income softness, alongside annual revenue and profit declines, could challenge the premium P/E and pressure sentiment if those trends persist.

Find out about the key risks to this NVR narrative.

Another View: DCF Says the Price May Be Too Low

While the current 16.2x P/E points to an expensive stock on earnings, the SWS DCF model suggests a different picture. At $7,623.76, NVR is priced about 14.5% below an estimated future cash flow value of $8,914.11. This frames today’s level as a potential discount rather than a premium. How much weight do you put on cash flow versus headline multiples?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out NVR for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 866 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own NVR Narrative

If you see things differently or want to test your own assumptions against the same data, you can build a custom view of NVR in minutes with Do it your way.

A great starting point for your NVR research is our analysis highlighting 1 key reward and 1 important warning sign that could impact your investment decision.

Looking for more investment ideas?

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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