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In the last reported quarter, the company’s earnings and revenues surpassed the Zacks Consensus Estimate by 27.1% and 4.1%, respectively. Earnings and revenues increased 32.4% and 9.4% from the prior-year period, respectively.
On an encouraging note, earnings topped analysts’ expectations in all the trailing four quarters, the average surprise being 30.2%.
Trend in Estimate Revision
The Zacks Consensus Estimate for the fiscal second-quarter earnings per share (EPS) has declined 1 cent to $4.13 from $4.14 over the past 60 days. The said figure indicates 44.9% growth from the year-ago EPS of $2.85.
The consensus mark for revenues is pegged at $2.52 billion, suggesting 0.5% year-over-year growth.
Factors to Note
Toll Brothers’ fiscal second-quarter home sales are expected to have increased slightly from the year-ago reported level, given higher pricing. Although higher mortgage rates will impact the volumes to some extent, low-existing homes for sale have been driving demand for new homes in the market. This tailwind is likely to have helped the company to post higher orders in the quarter.
This apart, its focus on luxury move-up buyers, who already possess a residence and are looking to shift to larger and better homes, will somewhat contribute to the revenues. Toll Brothers has been enjoying greater pricing power than other homebuilding companies, as luxury homebuyers are less sensitive to price changes. The company has also been benefiting from the strategy of broadening its product lines, price points and geographies, along with spec sales.
On the fiscal first-quarter earnings call, TOL stated that it expects slightly lower home deliveries within 2,400-2,500 units from 2,492 units delivered in the prior-year quarter (considering the midpoint) at an average price of $1,000,000-$1,010,000 (suggesting a rise from $999,300 a year ago).
Higher land, labor and raw material costs are expected to put pressure on the fiscal second-quarter margins. Toll Brothers expects the adjusted home sales gross margin to be 27.6%, implying a decrease from 28.3% reported in the year-ago period. SG&A expenses are estimated to be 9.7% of home sales revenues, indicating a rise from 9.1% reported in the year-ago period. The company expects the effective tax rate to be 25.8%.
Our Estimates
Our model predicts home sales revenues will decline 1.3% year over year to $2.46 billion due to lower deliveries projection of 2,443 (down 2% year over year).
We expect net signed contracts to be around 2,508 units, indicating an improvement of 7.5% from the prior-year reported figure.
Our model predicts a backlog of 6,758 units, indicating a decline of 10.8% from the year-ago period. The same for the backlog (in values) is pegged at $7.03 billion, implying a decline of 16.1% from the $8.38 million recorded at the second quarter of fiscal 2023-end.
What Our Quantitative Model Predicts
Our proven model does not conclusively predict an earnings beat for Toll Brothers this time around. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, this is not the case here, as you will see below.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company currently carries a Zacks Rank #2.
Peer Releases
Meritage Homes Corporation (MTH - Free Report) reported impressive results for first-quarter 2024. Both earnings and total closing revenues surpassed the Zacks Consensus Estimate and increased on a year-over-year basis. The upside was backed by higher deliveries.
Solid execution on its spec building and streamlined strategy helped it achieve yet another record backlog conversion rate of 138% and a return on equity of 18% during the quarter.
PulteGroup Inc. (PHM - Free Report) reported stellar results in first-quarter 2024, wherein earnings and revenues surpassed the Zacks Consensus Estimate.
Also, both metrics increased year over year on favorable demand conditions and its balanced operating model, which allows the company to more effectively meet the individual needs of first-time, move-up and active-adult consumers.
D.R. Horton, Inc. (DHI - Free Report) reported second-quarter fiscal 2024 (ended Mar 31, 2024) results, with earnings and revenues surpassing Zacks Consensus Estimate.
On a year-over-year basis, both the top and bottom lines increased. The upside was backed by the supply of new and existing homes as affordable price points remain limited and robust housing demand is supported by favorable demographics amid elevated inflation and mortgage/interest rates.
Image: Bigstock
What's in Store for Toll Brothers' (TOL) in Q2 Earnings?
Toll Brothers, Inc. (TOL - Free Report) is scheduled to report second-quarter fiscal 2024 (ended Apr 30, 2024) results on May 21, after the closing bell.
In the last reported quarter, the company’s earnings and revenues surpassed the Zacks Consensus Estimate by 27.1% and 4.1%, respectively. Earnings and revenues increased 32.4% and 9.4% from the prior-year period, respectively.
On an encouraging note, earnings topped analysts’ expectations in all the trailing four quarters, the average surprise being 30.2%.
Trend in Estimate Revision
The Zacks Consensus Estimate for the fiscal second-quarter earnings per share (EPS) has declined 1 cent to $4.13 from $4.14 over the past 60 days. The said figure indicates 44.9% growth from the year-ago EPS of $2.85.
Toll Brothers Inc. Price and EPS Surprise
Toll Brothers Inc. price-eps-surprise | Toll Brothers Inc. Quote
The consensus mark for revenues is pegged at $2.52 billion, suggesting 0.5% year-over-year growth.
Factors to Note
Toll Brothers’ fiscal second-quarter home sales are expected to have increased slightly from the year-ago reported level, given higher pricing. Although higher mortgage rates will impact the volumes to some extent, low-existing homes for sale have been driving demand for new homes in the market. This tailwind is likely to have helped the company to post higher orders in the quarter.
This apart, its focus on luxury move-up buyers, who already possess a residence and are looking to shift to larger and better homes, will somewhat contribute to the revenues. Toll Brothers has been enjoying greater pricing power than other homebuilding companies, as luxury homebuyers are less sensitive to price changes. The company has also been benefiting from the strategy of broadening its product lines, price points and geographies, along with spec sales.
On the fiscal first-quarter earnings call, TOL stated that it expects slightly lower home deliveries within 2,400-2,500 units from 2,492 units delivered in the prior-year quarter (considering the midpoint) at an average price of $1,000,000-$1,010,000 (suggesting a rise from $999,300 a year ago).
Higher land, labor and raw material costs are expected to put pressure on the fiscal second-quarter margins. Toll Brothers expects the adjusted home sales gross margin to be 27.6%, implying a decrease from 28.3% reported in the year-ago period. SG&A expenses are estimated to be 9.7% of home sales revenues, indicating a rise from 9.1% reported in the year-ago period. The company expects the effective tax rate to be 25.8%.
Our Estimates
Our model predicts home sales revenues will decline 1.3% year over year to $2.46 billion due to lower deliveries projection of 2,443 (down 2% year over year).
We expect net signed contracts to be around 2,508 units, indicating an improvement of 7.5% from the prior-year reported figure.
Our model predicts a backlog of 6,758 units, indicating a decline of 10.8% from the year-ago period. The same for the backlog (in values) is pegged at $7.03 billion, implying a decline of 16.1% from the $8.38 million recorded at the second quarter of fiscal 2023-end.
What Our Quantitative Model Predicts
Our proven model does not conclusively predict an earnings beat for Toll Brothers this time around. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, this is not the case here, as you will see below.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company currently carries a Zacks Rank #2.
Peer Releases
Meritage Homes Corporation (MTH - Free Report) reported impressive results for first-quarter 2024. Both earnings and total closing revenues surpassed the Zacks Consensus Estimate and increased on a year-over-year basis. The upside was backed by higher deliveries.
Solid execution on its spec building and streamlined strategy helped it achieve yet another record backlog conversion rate of 138% and a return on equity of 18% during the quarter.
PulteGroup Inc. (PHM - Free Report) reported stellar results in first-quarter 2024, wherein earnings and revenues surpassed the Zacks Consensus Estimate.
Also, both metrics increased year over year on favorable demand conditions and its balanced operating model, which allows the company to more effectively meet the individual needs of first-time, move-up and active-adult consumers.
D.R. Horton, Inc. (DHI - Free Report) reported second-quarter fiscal 2024 (ended Mar 31, 2024) results, with earnings and revenues surpassing Zacks Consensus Estimate.
On a year-over-year basis, both the top and bottom lines increased. The upside was backed by the supply of new and existing homes as affordable price points remain limited and robust housing demand is supported by favorable demographics amid elevated inflation and mortgage/interest rates.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.