NVR (NVR) Surges 3.4%: Is This an Indication of Further Gains?

NVR (NVR) shares ended the last trading session 3.4% higher at $6. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 4.8% gain over the past four weeks.

NVR stock is likely to have gained on the back of an improving macroeconomic backdrop and stronger investor sentiment toward homebuilder stocks. The Federal Reserve's decision to keep its benchmark interest rate unchanged at 3.5%-3.75% likely boosted confidence in the housing sector. Additionally, mortgage rates eased to 6.47% for the week ended June 18 from 6.52% a week earlier, according to Freddie Mac, providing further support for homebuilder stocks.

This homebuilder is expected to post quarterly earnings of $95.20 per share in its upcoming report, which represents a year-over-year change of -12.3%. Revenues are expected to be $2.4 billion, down 5.8% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For NVR, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on NVR going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

NVR is part of the Zacks Building Products - Home Builders industry. Smith Douglas Homes Corp. (SDHC), another stock in the same industry, closed the last trading session 3.8% higher at $13.75. SDHC has returned 15.9% in the past month.

Smith Douglas Homes Corp.'s consensus EPS estimate for the upcoming report has remained unchanged over the past month at $0.1. Compared to the company's year-ago EPS, this represents a change of +176.9%. Smith Douglas Homes Corp. currently boasts a Zacks Rank of #3 (Hold).

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This article originally published on Zacks Investment Research (zacks.com).

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