Stock market performance and financial comparison analysis

Finance (Stock Comparison): NVR and TOL

Comparison of the Past and Current Financial Performance of NVR, Inc. And Toll Brothers

NVR, Inc. ("NVR"). This company competes in two mutually compatible industries: homebuilding and mortgage banking. According to the Reuters' entry, both of these operations are primarily administered through a wholly owned subsidiary, NVR Mortgage Finance, Inc. (NVRM), which currently competes in 11 states. The homebuilding component of NVR's business involves building and selling single-family detached homes, townhomes and condominium buildings under three trade names: Ryan Homes, NVHomes and Fox Ridge Homes (NVR, Inc. 2).

The company's homes are usually 2- to 4-bedrooms in size and feature modern design elements used in combination with traditional or colonial designs. The company maintains mortgage services in each of its homebuilding markets, and the parent company manages the lion's share of the mortgage loans it closes in these secondary markets (NVR, Inc. 3). As can be seen Figure 1 below, the company has enjoyed healthy sales, even during periods of economic sluggishness:

Figure 1. NVR, Inc. Stock Performance - Past Five Years to Date vs. S&P 500 (Source: Yahoo! Finance 2005).

Toll Brothers, Inc. ("Toll"). According to the Reuters entry, this company competes in 20 states in six different regions of the U.S. And "designs, builds, markets and arranges financing for single-family detached and attached homes in luxury residential communities" (1). This company is well positioned to capitalize on the growing population of older Americans whose children have moved out and are in search of more efficient and cost-effective homes. Like the business model adopted by NVR, Toll also takes advantage of efficiencies in its value chain by developing its properties on land that the company has either acquired and/or developed.

For the 5-year period ended October 31, 2004, Toll had completed 24,271 homes in 456 communities, including 6,627 homes from 273 communities during the fiscal year ended October 31, 2004 (Toll 2).