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Why Is Toll Brothers (TOL) Up 2.8% Since the Last Earnings Report?
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It has been about a month since the last earnings report for Toll Brothers Inc. (TOL - Free Report) . Shares have added about 2.8% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Toll Brothers reported adjusted earnings of $0.73 per share in the second quarter of fiscal 2017, beating the Zacks Consensus Estimate of $0.62 by 17.7%. Adjusted earnings also improved 43.1% year over year on the back of higher revenues.
The company reported revenues of $1.36 billion in the fiscal second quarter, surpassing the consensus mark of $1.25 billion by nearly 9%. Revenues were up 21.4% year over year.
Quarter Detail
Toll Brothers operates under two segments – Traditional Home Building and City Living.
Traditional Home Building revenues during the quarter totaled $1.29 billion, up 21.7% year over year, while City Living revenues of $76.6 million rose 41.9%, courtesy of a higher number of homes delivered.
Inside the Headline Numbers
Consolidated homebuilding deliveries rose 26% year over year to 1,638 units in the second quarter of fiscal 2017. Deliveries increased across all West, North and Mid-Atlantic, California and South regions.
Average price of homes delivered was $832,400 in the quarter, down 2.7% year over year due to changes in the mix.
The number of net signed contracts was 2,511 units in the second quarter, up 26% year over year. Value of net signed contracts during the quarter was $2.02 billion, up 23% year over year. This marks the eleventh consecutive quarter of year-over-year growth in contracts.
At the end of the fiscal second quarter, Toll Brothers had a backlog of 6,018 homes, up 22% year over year. Potential housing revenues from backlog grew 19% year over year to $5 billion. The average price of backlog was $831,000 in the second quarter, compared with $848,600 in the prior-year quarter.
The company’s homebuilding adjusted gross margin declined 140 basis points (bps) to 24.3% in the quarter under review.
As a percentage of revenues, SG&A expenses contracted to 10.8% from 11.5% in the second quarter of fiscal 2016.
On Apr 28, 2017, the company paid its first quarterly dividend of $0.08 per share to shareholders of record on the close of business on Apr 14, 2017.
Financials
Toll Brothers had $691.3 million in cash as on Apr 30, 2017, compared with $423.2 million at the end of second-quarter fiscal 2016 and $633.7 million as on Oct 31, 2016.
Third-Quarter Fiscal 2017 Guidance
The company expects home deliveries between 1,675 and 1,975 units (previously 1,350 –1,650) in the third quarter of fiscal 2017 at an average price of $790,000 to $815,000 (previously $810,000–$835,000).
Adjusted gross margin in the fiscal third quarter is expected to improve by 10 bps.
Third-quarter fiscal 2017 SG&A expenses are estimated at approximately 10.4% (earlier 11.4%) of revenues.
Fiscal 2017 Guidance
For fiscal 2017, home deliveries are anticipated in the range of 6,950 to 7,450 units (previously 6,700–7,500) at an average price of $775,000–$825,000.
Revenues are projected between $5.4 billion and $6.1 billion (previously $5.19 billion to $6.19 billion) for fiscal 2017, compared with $5.17 billion in fiscal 2016.
Toll Brothers reaffirmed its adjusted gross margin expectation at the 24.8–25.3% band for fiscal 2017. SG&A expenses, as a percentage of fiscal 2017 revenues, are also still expected at around 10.6%.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been six revisions lower for the current quarter. In the past month, the consensus estimate has shifted lower by 12% due to these changes.
At this time, Toll Brothers' stock has a nice Growth Score of 'B', though it is lagging a lot on the momentum front with an 'F'. The stock was allocated a grade of 'B' on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for value and growth investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.
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Why Is Toll Brothers (TOL) Up 2.8% Since the Last Earnings Report?
It has been about a month since the last earnings report for Toll Brothers Inc. (TOL - Free Report) . Shares have added about 2.8% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Toll Brothers Tops Q2 Earnings & Revenues, Updates View
Toll Brothers reported adjusted earnings of $0.73 per share in the second quarter of fiscal 2017, beating the Zacks Consensus Estimate of $0.62 by 17.7%. Adjusted earnings also improved 43.1% year over year on the back of higher revenues.
The company reported revenues of $1.36 billion in the fiscal second quarter, surpassing the consensus mark of $1.25 billion by nearly 9%. Revenues were up 21.4% year over year.
Quarter Detail
Toll Brothers operates under two segments – Traditional Home Building and City Living.
Traditional Home Building revenues during the quarter totaled $1.29 billion, up 21.7% year over year, while City Living revenues of $76.6 million rose 41.9%, courtesy of a higher number of homes delivered.
Inside the Headline Numbers
Consolidated homebuilding deliveries rose 26% year over year to 1,638 units in the second quarter of fiscal 2017. Deliveries increased across all West, North and Mid-Atlantic, California and South regions.
Average price of homes delivered was $832,400 in the quarter, down 2.7% year over year due to changes in the mix.
The number of net signed contracts was 2,511 units in the second quarter, up 26% year over year. Value of net signed contracts during the quarter was $2.02 billion, up 23% year over year. This marks the eleventh consecutive quarter of year-over-year growth in contracts.
At the end of the fiscal second quarter, Toll Brothers had a backlog of 6,018 homes, up 22% year over year. Potential housing revenues from backlog grew 19% year over year to $5 billion. The average price of backlog was $831,000 in the second quarter, compared with $848,600 in the prior-year quarter.
The company’s homebuilding adjusted gross margin declined 140 basis points (bps) to 24.3% in the quarter under review.
As a percentage of revenues, SG&A expenses contracted to 10.8% from 11.5% in the second quarter of fiscal 2016.
On Apr 28, 2017, the company paid its first quarterly dividend of $0.08 per share to shareholders of record on the close of business on Apr 14, 2017.
Financials
Toll Brothers had $691.3 million in cash as on Apr 30, 2017, compared with $423.2 million at the end of second-quarter fiscal 2016 and $633.7 million as on Oct 31, 2016.
Third-Quarter Fiscal 2017 Guidance
The company expects home deliveries between 1,675 and 1,975 units (previously 1,350 –1,650) in the third quarter of fiscal 2017 at an average price of $790,000 to $815,000 (previously $810,000–$835,000).
Adjusted gross margin in the fiscal third quarter is expected to improve by 10 bps.
Third-quarter fiscal 2017 SG&A expenses are estimated at approximately 10.4% (earlier 11.4%) of revenues.
Fiscal 2017 Guidance
For fiscal 2017, home deliveries are anticipated in the range of 6,950 to 7,450 units (previously 6,700–7,500) at an average price of $775,000–$825,000.
Revenues are projected between $5.4 billion and $6.1 billion (previously $5.19 billion to $6.19 billion) for fiscal 2017, compared with $5.17 billion in fiscal 2016.
Toll Brothers reaffirmed its adjusted gross margin expectation at the 24.8–25.3% band for fiscal 2017. SG&A expenses, as a percentage of fiscal 2017 revenues, are also still expected at around 10.6%.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been six revisions lower for the current quarter. In the past month, the consensus estimate has shifted lower by 12% due to these changes.
Toll Brothers Inc. Price and Consensus
Toll Brothers Inc. Price and Consensus | Toll Brothers Inc. Quote
VGM Scores
At this time, Toll Brothers' stock has a nice Growth Score of 'B', though it is lagging a lot on the momentum front with an 'F'. The stock was allocated a grade of 'B' on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for value and growth investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.