U.S. luxury homebuilder Toll Brothers (TOL) has reported financial results that beat Wall Street forecasts on the top and bottom lines.
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The company, which builds, markets, and finances residential and commercial real estate properties across the U.S., announced Fiscal third-quarter earnings per share (EPS) of $3.73, which topped consensus estimates of $3.60.
Revenue in the quarter totaled $2.88 billion, which narrowly beat Wall Street forecasts of $2.86 billion. Sales were up 6% from a year earlier. “We are pleased to report another strong quarter. We delivered 2,959 homes at an average price of $974,000, generating record third quarter home sales revenues,” said Toll Brothers CEO Douglas Yearley, Jr. in the company’s earnings release.
Toll Brothers earnings per share. Source: Main Street Data
Forward Guidance
In terms of guidance, Toll Brothers said that it expects to deliver 3,350 homes in the current quarter at nearly $1 million apiece. However, new contracts in the company’s just reported Fiscal Q3 fell by 4% and its backlog declined, signaling softer demand.
Still, the company managed to report a strong adjusted gross margin of 27.5%, which reflects its focus on pricier luxury homes, allowing profits to rise even as sales volumes dipped. Homebuilder stocks have been in the news in recent days after billionaire investors Warren Buffett and Stanley Druckenmiller took stakes in several prominent names. Some investors expect housing stocks to rise as interest rates fall.
TOL stock has gained 6% this year.
Is TOL Stock a Buy?
Toll Brothers stock has a consensus Moderate Buy rating among 15 Wall Street analysts. That rating is based on nine Buy, five Hold, and one Sell recommendations issued in the last three months. The average TOL price target of $138.93 implies 5.11% upside from current levels. These ratings could change after the company’s financial results.
