- The Washington Times - Monday, November 13, 2000

NVR Inc. has kept decent control over its costs and has managed to grow, despite a tight labor market, a trend analysts say will continue.

The McLean-based firm builds and sells condominiums, single-family and town homes in 10 states. It also provides mortgage services.

NVR's success has been "a combination of strong growth in their home building operations and the company's share repurchase program, which has been driving the earnings per share up," said David Weaver, an analyst with Legg Mason Wood Walker in Baltimore.

Home building boomed in the mid-1990s amid low interest rates and surging demand.

Last year, however, interest rates began inching up prompting some analysts to warn of an industry slowdown. But that hasn't happened yet and firms like NVR are still prospering, even as low unemployment has put pressure on construction industry wages.

"The home building stocks had been in a funk for years. Nobody wanted to know what the home building industry was, so the stocks were selling sometimes at an extraordinarily low value," said Sheldon Grodsky, an analyst with Grodsky Associates in South Orange, N.J. "But people can't seem to get enough of them now, so typically they have doubled."

NVR's stock began heading up this spring when the Federal Reserve took action to hold interest rates in check. At the time, many investors were starting to sour on Internet stock and starting anew at real estate stocks.

NVR hit its 52-week low of $42 in February on the American Stock Exchange; The stock's 52-week high came four months later, when it reached $113.20.

It closed Friday at $tk.

That is a big change for NVR compared to the mid-1990s when it was emerging from a recession-induced bankruptcy protection filing. Then its shares were trading at about $10.

The firm builds homes in the District, Maryland, Virginia, Pennsylvania, New York, Delaware, Ohio, North Carolina, South Carolina and Tennessee. The company opened its doors in 1948 providing affordable housing to servicemen returning from World War II.

Today it builds under three names. Ryan Homes builds housing for first-time and move-up homeowners. Fox Ridge Homes, which was developed in the early 1960s, concentrates on building for first-time homeowners in Nashville, Tenn.

NVHomes was the last division to be created in the 1980s. It caters to upscale homeowners in the Washington-Baltimore region.

NVR Mortgage, NVR's financing division, works in 12 states. It expanded last year when NVR acquired First Republic Mortgage, gaining 11 branches in the mid-Atlantic.

The home builder's top competitors are Ryland, Pulte and Centex, which have also done well during the economic boom.

NVR reported net income for its third quarter ended Sept. 30, jumped 45 percent to $43.9 million ($3.97 cents per diluted share) from $30.3 million ($2.52 centers) a year ago. Net sales rose 15.1 percent to $602.49 million from $523.55 in the July-September quarter of 1999.

Mr. Weaver projects that earnings for the sector will continue growing. He estimates NVR's figures will jump 13 percent next year, "the highest of any of the home builders that we have estimates for."

Over the past year the company's shareholders have authorized the purchase of nearly about $135,000 million in outstanding common shares.

"I think they are doing a great job allocating," said Mr. Weaver. "They have taken measures to utilize their capital in the best possible way and have been very efficient at that."



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