Just read the press releases, do some cursory number crunching (which I did a week ago), and you'll see that homebuilder NVR (NYSE:NVR) looks really good -- except for one big weakness. First, though, let's look at today's housing news.

The headlines
Today's homebuilding headliners are eye-grabbers. Two major brokerage firms downgraded homebuilding stocks. One, the securities arm of Bank of America (NYSE:BAC), reduced NVR's rating from buy all the way to sell. Yikes!

Then there are the runaway train stories. Though the relative strength of the housing market remains in question, housing starts were up 3.4% in September, and housing permits surged to a 32-year high.

NVR: The bullish case
For the third quarter, revenue (compared to the comparable quarter a year ago) rose 18%, while earnings per diluted share soared 28%. So the past quarter was just fine -- and so is the near-term future. Orders are up 7%, and they were up in all areas except Washington, D.C. (which rang up 26.1% of total sales in the first nine months of 2005).

The backlog is up 14% on a unit basis and the dollar value of the backlog, up 30%, stands at $3.8 billion. With this quarter's sales at $1.35 billion, the backlog represents almost three-quarters of sales at current levels. That's strong.

NVR closed the latest quarter with $245.7 million in cash and almost $317 million in total debt -- a modest net debt (debt minus cash) of $71.3 million for a company competing in the capital-intensive business of building homes. The debt-to-capital ratio stands at a relatively modest 35%, and the stock trades at somewhere around 4.3 times enterprise value (EV) to earnings before interest, taxes, depreciation, and amortization (EBITDA) (based on trailing 12-month data for the quarter completed 6/31/05, used for purposes of comparability, as peer group companies have not yet used results).

The big boys, DR Horton (NYSE:DHI), Pulte (NYSE:PHM), Lennar (NYSE:LEN), and Centex (NYSE:CTX) sell for 6 to 12.3 times EV-to-EBITDA. And on the basis of debt, NVR fares well, too -- its nearest peer has a D/E ratio nearly twice that of NVR (per data released 6/31/05).

The dark cloud
Ah, but there is that one pesky weakness. The press release states that during the first nine months of 2005, the company repurchased approximately 643,000 of its own shares. So go to the income statement and look at the shares outstanding for the first nine months. They've fallen (thank goodness) from 6.574 million to 6.240 million. Wait ... say what? No, your eyes are not fooling you, Fool. That's a decrease of just 38,000 shares. Thank generous option grants for the modest decrease in shares.

Now do yourself a favor and drop down to the weighted average diluted shares. They increased from 7.877 million to 7.934 million. So the option machine is still turning out awards. I want to thank Motley Fool community member AtlantaDon for catching this house of cards back in 2003.

Add it up. The outlook for housing looks shaky, as aforementioned, and NVR's exposure to the weak Washington D.C. market doesn't help build confidence. The company's fundamentals look fairly strong, but it seems to me that there's a lack of real commitment to building shareholder value. In my opinion, NVR would be a great company for investors -- if they could stop cranking out the options.

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Fool contributor W.D. Crotty does not own shares in any of the companies mentioned. Click here to see the Motley Fool's disclosure policy.