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Toll Brothers (TOL) Misses Earnings, Beats Revenues in Q4
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Toll Brothers, Inc. (TOL - Free Report) reported adjusted earnings of 67 cents per share in the fourth quarter of fiscal 2016, missing the Zacks Consensus Estimate of 98 cents by 31.6%. Adjusted earnings, also, declined 16.3% year over year.
Toll Brothers reported revenues of $1.86 billion in the fiscal fourth quarter, surpassing the Zacks Consensus Estimate of $1.79 billion by nearly 4%. Revenues also increased 29% year over year on the back of an increase in home deliveries and average price of homes delivered.
Shares of the homebuilding company gained nearly 5% in yesterday’s trading session following the robust revenue results.
Quarter Detail
Toll Brothers offers homes under two segments – Traditional Home Building Product, and City Living. Traditional Home Building revenues during the quarter totaled $1.84 billion, up 40.9% year over year. However, City Living reported revenues of $13.9 million, down 89.4% from $131.6 million in the prior-year quarter due to a lower number of homes delivered.
Consolidated homebuilding deliveries rose 22% year over year to 2,224 units in the fourth quarter of fiscal 2016. Deliveries increased across all West, California, North, Mid-Atlantic and South regions.
Average price of homes delivered was $834,300 in the quarter, up 5.6% year over year. It ended fiscal 2016 with 310 selling communities, up 7.6% on a year-over-year basis.
The number of net orders signed was 1,728 units in the fourth quarter, up 20% year over year. Value of net orders signed during the quarter was $1.47 billion, up 17% year over year.
At the end of the fiscal fourth quarter, Toll Brothers had a backlog of 4,685 homes, up 15% year over year. Potential housing revenues from backlog grew 14% year over year to $3.98 billion. The average price of backlog was $850,000 in the fourth quarter, compared to $862,000 in the prior-year quarter.
The company’s homebuilding adjusted gross margin (excluding interest impairments and changes in reserves) decreased 210 basis points (bps) to 24.9% in the quarter.
As a percentage of revenues, SG&A expenses improved to 8.1% compared with 8.7% in the fourth quarter of fiscal 2015.
Fiscal 2016
Toll Brothers reported adjusted earnings of $2.18 per share in fiscal 2016, missing the Zacks Consensus Estimate of $2.49 by 12.4%. However, adjusted earnings per share increased 10.7% year over year driven by solid revenues.
The homebuilding company reported revenues of $5.17 billion in fiscal 2016, beating the Zacks Consensus Estimate by 1.4%. Revenues also increased 24% year over year on the back of a 10% increase in home deliveries.
Acquisitions
On Nov 7, 2016, Toll Brothers announced the acquisition of Coleman Homes in Boise, Idaho, which involved the takeover of approximately 1,400 owned lots, 350 controlled lots and the immediate addition of 15 selling communities to its first-quarter fiscal 2017 community count.
Fiscal 2017 Outlook
Coleman is expected to deliver approximately 300 homes at an average delivered price of $300,000 to $325,000 in fiscal 2017.
The company expects home deliveries between 1,000 and 1,250 units in the first quarter of fiscal 2017 with an average price of $750,000 to $780,000. For fiscal 2017, home deliveries are anticipated in the range of 6,500 to 7,500 units with an average price of $775,000–$825,000.
Adjusted gross margin in fiscal 2017 is expected in the range of 24.8–25.3% of revenues, reflecting the impact of Coleman Homes acquisition and changes in product deliveries mix.
First-quarter fiscal 2017 SG&A is expected to be approximately 15.2% of revenues. SG&A, as a percentage of fiscal 2017 revenues, is expected to be approximately 10.6%.
Better-ranked stocks in the construction sector include Gibraltar Industries, Inc. (ROCK - Free Report) , Hovnanian Enterprises Inc. (HOV - Free Report) and AAON, Inc. (AAON - Free Report) .
Full-year 2016 earnings for Gibraltar are expected to grow 44.9%.
Hovnanian, a Zacks Rank #2 (Buy) stock, is likely to witness 190.9% growth in fiscal 2016 earnings.
AAON carries a Zacks Rank #2. Full-year 2016 earnings for the company are expected to rise 21.4%.
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Toll Brothers (TOL) Misses Earnings, Beats Revenues in Q4
Toll Brothers, Inc. (TOL - Free Report) reported adjusted earnings of 67 cents per share in the fourth quarter of fiscal 2016, missing the Zacks Consensus Estimate of 98 cents by 31.6%. Adjusted earnings, also, declined 16.3% year over year.
Toll Brothers reported revenues of $1.86 billion in the fiscal fourth quarter, surpassing the Zacks Consensus Estimate of $1.79 billion by nearly 4%. Revenues also increased 29% year over year on the back of an increase in home deliveries and average price of homes delivered.
Shares of the homebuilding company gained nearly 5% in yesterday’s trading session following the robust revenue results.
Quarter Detail
Toll Brothers offers homes under two segments – Traditional Home Building Product, and City Living. Traditional Home Building revenues during the quarter totaled $1.84 billion, up 40.9% year over year. However, City Living reported revenues of $13.9 million, down 89.4% from $131.6 million in the prior-year quarter due to a lower number of homes delivered.
Consolidated homebuilding deliveries rose 22% year over year to 2,224 units in the fourth quarter of fiscal 2016. Deliveries increased across all West, California, North, Mid-Atlantic and South regions.
Average price of homes delivered was $834,300 in the quarter, up 5.6% year over year. It ended fiscal 2016 with 310 selling communities, up 7.6% on a year-over-year basis.
The number of net orders signed was 1,728 units in the fourth quarter, up 20% year over year. Value of net orders signed during the quarter was $1.47 billion, up 17% year over year.
At the end of the fiscal fourth quarter, Toll Brothers had a backlog of 4,685 homes, up 15% year over year. Potential housing revenues from backlog grew 14% year over year to $3.98 billion. The average price of backlog was $850,000 in the fourth quarter, compared to $862,000 in the prior-year quarter.
The company’s homebuilding adjusted gross margin (excluding interest impairments and changes in reserves) decreased 210 basis points (bps) to 24.9% in the quarter.
As a percentage of revenues, SG&A expenses improved to 8.1% compared with 8.7% in the fourth quarter of fiscal 2015.
Fiscal 2016
Toll Brothers reported adjusted earnings of $2.18 per share in fiscal 2016, missing the Zacks Consensus Estimate of $2.49 by 12.4%. However, adjusted earnings per share increased 10.7% year over year driven by solid revenues.
The homebuilding company reported revenues of $5.17 billion in fiscal 2016, beating the Zacks Consensus Estimate by 1.4%. Revenues also increased 24% year over year on the back of a 10% increase in home deliveries.
Acquisitions
On Nov 7, 2016, Toll Brothers announced the acquisition of Coleman Homes in Boise, Idaho, which involved the takeover of approximately 1,400 owned lots, 350 controlled lots and the immediate addition of 15 selling communities to its first-quarter fiscal 2017 community count.
Fiscal 2017 Outlook
Coleman is expected to deliver approximately 300 homes at an average delivered price of $300,000 to $325,000 in fiscal 2017.
The company expects home deliveries between 1,000 and 1,250 units in the first quarter of fiscal 2017 with an average price of $750,000 to $780,000. For fiscal 2017, home deliveries are anticipated in the range of 6,500 to 7,500 units with an average price of $775,000–$825,000.
Adjusted gross margin in fiscal 2017 is expected in the range of 24.8–25.3% of revenues, reflecting the impact of Coleman Homes acquisition and changes in product deliveries mix.
First-quarter fiscal 2017 SG&A is expected to be approximately 15.2% of revenues. SG&A, as a percentage of fiscal 2017 revenues, is expected to be approximately 10.6%.
TOLL BROTHERS Price, Consensus and EPS Surprise
TOLL BROTHERS Price, Consensus and EPS Surprise | TOLL BROTHERS Quote
Zacks Rank & Key Picks
Toll Brothers has a Zacks Rank #3 (Hold).
Better-ranked stocks in the construction sector include Gibraltar Industries, Inc. (ROCK - Free Report) , Hovnanian Enterprises Inc. (HOV - Free Report) and AAON, Inc. (AAON - Free Report) .
Gibraltar sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Full-year 2016 earnings for Gibraltar are expected to grow 44.9%.
Hovnanian, a Zacks Rank #2 (Buy) stock, is likely to witness 190.9% growth in fiscal 2016 earnings.
AAON carries a Zacks Rank #2. Full-year 2016 earnings for the company are expected to rise 21.4%.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>