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In 2023 Toll Brothers (TOL - Free Report) was named the world’s most admired homebuilder by Fortune Magazine for a third consecutive year as the leading builder of luxury homes in the United States. In fact, the million-dollar homebuilder has now been named to Fortune Magazine’s most admired companies list for eight consecutive years and its stock looks poised to continue reaping lofty gains for investors.
To that point, Toll Brothers stock sports a Zacks Rank #1 (Strong Buy) and lands the Bull of the Day after impressively surpassing its fiscal first quarter expectations last week.
Image Source: Zacks Investment Research
Million-Dollar Home Sales
Driving Toll Brothers' strong Q1 results were 1,927 homes delivered at an average price of approximately $1 million which generated sales of $1.94 billion. This topped Q1 sales estimates of $1.87 billion by 4% and was up 9% from $1.78 billion in the comparative quarter.
Distinctive architecture and prestigious locations in some of the most highly desired areas and communities nationwide have catalyzed Toll Brothers' success and increased profitability. First quarter net income jumped 25% to $239.6 million and $2.25 per share which represented 32% EPS growth and crushed expectations of $1.77 a share by 27%. Piggybacking on the acknowledgment of Toll Brothers' consistency by Fortune Magazine, the company has now surpassed the Zacks EPS Consensus for 16 consecutive quarters and posted an average earnings surprise of 30.16% in its last four quarterly reports.
Image Source: Zacks Investment Research
Gross Margin Improvement
Further illustrating Toll Brothers' immense profitability and future earnings potential is its trailing twelve-month (TTM) Growth Margin percentage of 26.92%. This is very impressive considering the company is selling million-dollar homes and tops the Zacks Building Products-Home Builders Industry average of 21.78%. Notably, Toll Brothers’ home sales gross margin increased to 27.6% last quarter compared to 25.6% in Q1 2023.
Image Source: Zacks Investment Research
Spec Homes & On-Going Demand
Indicative of solid demand, Toll Brothers signed 2,042 net contracts for $2.06 billion during the first quarter which the company said was a 40% increase in units and a 42% increase in dollar value. More intriguing, Toll Brothers' inventory dollar value which is new existing homes that are either finished or waiting to be completed (Speculative Homes) ticked up 6% during Q1 to $9.58 billion.
Image Source: Zacks Investment Research
Checking the Boxes
In addition to its strong buy rating Toll Brothers stock has an overall “A” VGM Zacks Style Scores grade for the combination of Value, Growth, and Momentum. Indicative of momentum and more upside in Toll Brothers stock is that fiscal 2024 and FY25 EPS estimates have climbed 7% and 4% over the last week respectively.
Image Source: Zacks Investment Research
Following its Q1 report Toll Brothers' annual earnings are now projected to rise 6% this year to $13.15 per share. Fiscal 2025 EPS is expected to be virtually flat but TOL shares trade at an extremely cheap forward earnings multiple of just 8.5X, especially when considering the strong price performance and lofty bottom line expansion in recent years.
Image Source: Zacks Investment Research
Takeaway
Investors are always looking for a dominant industry leader and Toll Brothers has continued to assert itself as the crème of the crop in regard to homebuilders. Furthermore, now looks like an ideal time to buy Toll Brothers stock ahead of the busy spring home-buying season with it being noteworthy that the Zacks Building Products- Home Builders Industry is currently in the top 11% of over 250 Zacks industries.
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Bull of the Day: Toll Brothers (TOL)
In 2023 Toll Brothers (TOL - Free Report) was named the world’s most admired homebuilder by Fortune Magazine for a third consecutive year as the leading builder of luxury homes in the United States. In fact, the million-dollar homebuilder has now been named to Fortune Magazine’s most admired companies list for eight consecutive years and its stock looks poised to continue reaping lofty gains for investors.
To that point, Toll Brothers stock sports a Zacks Rank #1 (Strong Buy) and lands the Bull of the Day after impressively surpassing its fiscal first quarter expectations last week.
Image Source: Zacks Investment Research
Million-Dollar Home Sales
Driving Toll Brothers' strong Q1 results were 1,927 homes delivered at an average price of approximately $1 million which generated sales of $1.94 billion. This topped Q1 sales estimates of $1.87 billion by 4% and was up 9% from $1.78 billion in the comparative quarter.
Distinctive architecture and prestigious locations in some of the most highly desired areas and communities nationwide have catalyzed Toll Brothers' success and increased profitability. First quarter net income jumped 25% to $239.6 million and $2.25 per share which represented 32% EPS growth and crushed expectations of $1.77 a share by 27%. Piggybacking on the acknowledgment of Toll Brothers' consistency by Fortune Magazine, the company has now surpassed the Zacks EPS Consensus for 16 consecutive quarters and posted an average earnings surprise of 30.16% in its last four quarterly reports.
Image Source: Zacks Investment Research
Gross Margin Improvement
Further illustrating Toll Brothers' immense profitability and future earnings potential is its trailing twelve-month (TTM) Growth Margin percentage of 26.92%. This is very impressive considering the company is selling million-dollar homes and tops the Zacks Building Products-Home Builders Industry average of 21.78%. Notably, Toll Brothers’ home sales gross margin increased to 27.6% last quarter compared to 25.6% in Q1 2023.
Image Source: Zacks Investment Research
Spec Homes & On-Going Demand
Indicative of solid demand, Toll Brothers signed 2,042 net contracts for $2.06 billion during the first quarter which the company said was a 40% increase in units and a 42% increase in dollar value. More intriguing, Toll Brothers' inventory dollar value which is new existing homes that are either finished or waiting to be completed (Speculative Homes) ticked up 6% during Q1 to $9.58 billion.
Image Source: Zacks Investment Research
Checking the Boxes
In addition to its strong buy rating Toll Brothers stock has an overall “A” VGM Zacks Style Scores grade for the combination of Value, Growth, and Momentum. Indicative of momentum and more upside in Toll Brothers stock is that fiscal 2024 and FY25 EPS estimates have climbed 7% and 4% over the last week respectively.
Image Source: Zacks Investment Research
Following its Q1 report Toll Brothers' annual earnings are now projected to rise 6% this year to $13.15 per share. Fiscal 2025 EPS is expected to be virtually flat but TOL shares trade at an extremely cheap forward earnings multiple of just 8.5X, especially when considering the strong price performance and lofty bottom line expansion in recent years.
Image Source: Zacks Investment Research
Takeaway
Investors are always looking for a dominant industry leader and Toll Brothers has continued to assert itself as the crème of the crop in regard to homebuilders. Furthermore, now looks like an ideal time to buy Toll Brothers stock ahead of the busy spring home-buying season with it being noteworthy that the Zacks Building Products- Home Builders Industry is currently in the top 11% of over 250 Zacks industries.