Is NVR Stock Underperforming the S&P 500?

With a market cap of $21.1 billion, NVR, Inc. (NVR) is one of the largest U.S. homebuilders. It operates an asset-light model, purchasing finished lots rather than developing land, reducing financial risk and stabilizing margins. Through brands like Ryan Homes, NVHomes, and Heartland Homes, the company serves first-time buyers, move-up buyers, and luxury segments across 16 East Coast and Midwestern states. The Virginia-based company’s vertically integrated mortgage and title services enhance efficiency and customer experience. 

Companies worth $10 billion or more are generally described as "large-cap stocks." NVR fits right into that category, with its market cap exceeding this threshold, reflecting its substantial size and influence in the residential construction industry. Supported by strong revenue, healthy profitability, and disciplined inventory management, NVR maintains a resilient competitive position. 

Despite its notable strengths, NVR stock has dropped 19.3% from its 52-week high of $9,068.15 touched 52 weeks ago. The stock has plummeted 11.6% over the past three months, underperforming the S&P 500 Index’s ($SPX) 5% surge during the same time frame.

NVR’s performance looks much grimmer over the longer term. The stock has surged 2.5% over the past six months and plummeted 19.8% over the past 52 weeks, lagging behind SPX’s 13.9% gains and 13% over the same time frames, respectively. 

The stock has observed volatility recently and has dipped below both its 50-day and 200-day moving averages in the last few trading sessions. 

On Oct. 22, NVR shares dipped over 1% after reporting its Q3 results, as it reflected a softer housing environment despite slightly beating expectations. Its EPS of $112.33 surpassed Wall Street expectations of $107.88. While revenue of 2.61 billion dollars surpassed Street projections, it was down from the prior year, and net income fell to 343 million dollars as higher lot costs and affordability-driven pricing constraints pressured margins. New orders declined 16%, backlog dropped nearly 20%, and cancellation rates rose, signaling weaker demand and a more cautious buyer base.

When compared to its peer, NVR has significantly underperformed PulteGroup, Inc.’s (PHM) 21.3% rise over the past six months and 4.2% decline over the past 52 weeks.

Among the eight analysts covering the NVR stock, the consensus rating is a “Hold.” Its mean price target of $8,683 suggests a modest 18.6% upside potential from current price levels.