Homebuilder NVR (NYSE: NVR) beat Wall Street’s revenue expectations in Q4 CY2025, but sales fell by 4.7% year on year to $2.71 billion. Its non-GAAP profit of $121.54 per share was 14.8% above analysts’ consensus estimates.

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Company Overview

Known for its unique land acquisition strategy, NVR (NYSE: NVR) is a respected homebuilder and mortgage company in the United States.

Revenue Growth

A company’s long-term performance is an indicator of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last five years, NVR grew its sales at a mediocre 6.5% compounded annual growth rate. This was below our standard for the industrials sector and is a rough starting point for our analysis.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. NVR’s recent performance shows its demand has slowed as its annualized revenue growth of 4.1% over the last two years was below its five-year trend.

We can dig further into the company’s revenue dynamics by analyzing its backlog, or the value of its outstanding orders that have not yet been executed or delivered. NVR’s backlog reached $4.01 billion in the latest quarter and averaged 3.4% year-on-year declines over the last two years. Because this number is lower than its revenue growth, we can see the company hasn’t secured enough new orders to maintain its growth rate in the future.

This quarter, NVR’s revenue fell by 4.7% year on year to $2.71 billion but beat Wall Street’s estimates by 9.4%.

Looking ahead, sell-side analysts expect revenue to decline by 2.1% over the next 12 months, a deceleration versus the last two years. This projection doesn't excite us and implies its products and services will see some demand headwinds.

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Operating Margin

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

NVR has been a well-oiled machine over the last five years. It demonstrated elite profitability for an industrials business, boasting an average operating margin of 18.7%. This result was particularly impressive because of its low gross margin, which is mostly a factor of what it sells and takes huge shifts to move meaningfully. Companies have more control over their operating margins, and it’s a show of well-managed operations if they’re high when gross margins are low.

Analyzing the trend in its profitability, NVR’s operating margin decreased by 2 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

In Q4, NVR generated an operating margin profit margin of 16.5%, down 2.5 percentage points year on year. Since NVR’s operating margin decreased more than its gross margin, we can assume it was less efficient because expenses such as marketing, R&D, and administrative overhead increased.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

NVR’s EPS grew at a remarkable 13.8% compounded annual growth rate over the last five years, higher than its 6.5% annualized revenue growth. However, this alone doesn’t tell us much about its business quality because its operating margin didn’t improve.

We can take a deeper look into NVR’s earnings to better understand the drivers of its performance. A five-year view shows that NVR has repurchased its stock, shrinking its share count by 24.5%. This tells us its EPS outperformed its revenue not because of increased operational efficiency but financial engineering, as buybacks boost per share earnings.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For NVR, its two-year annual EPS declines of 2.8% mark a reversal from its (seemingly) healthy five-year trend. We hope NVR can return to earnings growth in the future.

In Q4, NVR reported adjusted EPS of $121.54, down from $139.93 in the same quarter last year. Despite falling year on year, this print easily cleared analysts’ estimates. Over the next 12 months, Wall Street expects NVR’s full-year EPS of $437.24 to shrink by 6.5%.

Key Takeaways from NVR’s Q4 Results

We were impressed by how significantly NVR blew past analysts’ adjusted operating income expectations this quarter. We were also excited its revenue outperformed Wall Street’s estimates by a wide margin. Zooming out, we think this was a solid print. The stock remained flat at $7,640 immediately following the results.

NVR had an encouraging quarter, but one earnings result doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).