NVR, Inc.

Methodology

NVR's homebuilding earnings are highly cyclical with housing markets and mortgage rates, requiring normalization to mid-cycle profitability rather than using peak or trough figures. The asset-light lot option model provides better capital efficiency than traditional builders. Evaluate earnings power across housing cycles and consider the company's unique risk profile from avoiding land ownership.

Methodology

NVR can show misleadingly low PEG ratios during housing booms when earnings surge, or high ratios during downturns despite eventual recovery potential. The metric works best for comparing to other homebuilders like Lennar while adjusting for cycle positioning. NVR's consistent execution and capital efficiency can justify modest premiums to peers.

Methodology

NVR pays no regular dividend, instead returning cash through aggressive share buybacks enabled by strong cash generation. Without dividends, PEGY equals PEG and both face cyclical distortions. For NVR, buyback activity and book value growth matter more than traditional income metrics given the capital allocation philosophy.