NVR

NVR runs the best business model in homebuilding: it controls roughly 180,100 lots almost entirely through forfeitable-deposit purchase agreements rather than owning and developing land, builds on a pre-sold basis, and pairs homebuilding with captive mortgage and title operations. The result is exceptional capital efficiency — a 34.7% return on equity, a 13.0% net margin, and a fortress balance sheet with $1.96B cash and just 0.52x liabilities/equity. Management has used that cash machine aggressively, repurchasing $1.83B of stock in FY2025 and shrinking the share count 6.6%, which is why retained earnings still grew 8.9% to $16.4B even as earnings fell.

The near-term picture, however, is deteriorating and management is unusually direct about it. FY2025 revenue slipped 1.9% to $10.3B, net income fell 20.3% to $1.34B, and diluted EPS dropped 13.8% to $436.55. The MD&A states demand was hurt by affordability, elevated inventory and weak consumer confidence, that NVR 'repositioned many communities to better compete for a reduced number of buyers,' and — most importantly — that it 'expect[s] these adjustments to have a materially negative impact on our gross margins during the first half of 2026' plus 'a significant decline in revenues in the first quarter of 2026.' That is explicit guidance for a worse first half ahead.