NVR
NVR, Inc.
$6,381.79
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Moderate
·
Conviction
Fair Value
Trading 22.7% below fair value
You pay
$6,381.79
Bear
$6,478.99
Fair
$8,253.09
Bull
$10,027.19
Bear
$6,478.99
+1.5%
$463.31 × 14x + net cash
Fair
$8,253.09
+29.3%
$463.31 × 18x + net cash
Bull
$10,027.19
+57.1%
$463.31 × 22x + net cash
Key Value Driver
Through-cycle normalized EPS ($463.31)
Implied Market Multiple
13.8x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $7148.67 from 25 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $8253.09 per share.
Warnings
Price-to-book value of 4.5x is above the normal range for this type of business (0.7x-2.0x). The stock may already price in a strong cycle.
Key Risks
- Standard 10-year DCF produces unreliable terminal values for cyclicals
- 'Cheap' P/E at cycle peak is the most common value trap — normalize first
- Captive finance subsidiaries have different risk profiles from manufacturing