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Moments ago, homebuilder NVR (AMEX: NVR) announced a $300 million share buyback plan. According to a news report, the buyback will be performed on the public market as well as through privately negotiated transactions. NVR, like every other homebuilder, has been getting killed in recent months due to the grim housing market.

I love seeing this, especially for a stock like NVR. Although I don't think homebuilders have bottomed for the short term, over the long term I believe most of them are tremendous values. Despite the housing slowdown, NVR still trades for just 15x next year's earnings and 6-7x earnings in a positive housing cycle. I think this buyback shows that management is committed to NVR and strongly believes in the company's long term potential.

Not only is this a logical move financially, but this move has appeased traders who have sent the stock quickly up about 40 points since the announcement. Traders love buybacks because they put a "floor" in a stock's price.

NVR announces buyback -- stock soars originally appeared on BloggingStocks on Tue, 31 Jul 2007 14:40:00 EST. Please see our terms for use of feeds.

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