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In the last reported quarter, the company’s earnings and revenues surpassed the Zacks Consensus Estimate by 26.7% and 11.1%, respectively. The said metrics also increased 83.2% and 18%, respectively, from the prior year on the back of higher deliveries and prices.
On an encouraging note, earnings topped analysts’ expectations in 17 of the 18 trailing quarters.
The Zacks Consensus Estimate for fiscal third-quarter earnings has remained unchanged at $2.30 per share over the past 60 days. The said figure indicates a 23% rise from the year-ago earnings of $1.87 per share. The consensus mark for revenues is $2.49 billion, suggesting a 10.2% year-over-year rise.
Factors to Note
Despite unprecedented supply chain issues and increased inflation, Toll Brothers’ third-quarter revenues are expected to have increased from the year-ago level, buoyed by a lack of available supply. Home sales of this luxury homebuilding company are expected to have increased in the fiscal third quarter from the year-ago level, given higher deliveries and prices.
Also, its focus on luxury move-up buyers — who already possess a residence and are looking for a shift to larger and better homes — has been commendable. Toll Brothers has been enjoying greater pricing power than other homebuilding companies as these homebuyers are less sensitive to price changes. The company has been benefiting from the strategy of broadening the product lines, price points and geographies.
During the fiscal second-quarter earnings call, TOL highlighted that it expects to record home deliveries of 2,750 units (indicating a rise from 2,597 units delivered in the prior-year period) at an average selling price or ASP of $895,000-$915,000 (suggesting a rise from $860,400 a year ago).
Toll Brothers expects adjusted home sales gross margin to be 27%, implying a rise from 25.6% recorded in the year-ago period. SG&A expenses are estimated to be 10.5% of home sales revenues, indicating no change from the year-ago period. Also, the company expects the effective tax rate to be 26%.
Meanwhile, higher land, labor and raw material costs are expected to have put pressure on fiscal third-quarter margins. Sustained supply-chain disruptions in the industry are expected to have reflected in the company’s performance.
Estimates
The Zacks Consensus Estimate for the backlog is pegged at 11,712 units, indicating growth of 9.9% year over year. The same for the average price of the backlog is pegged at $1,030,000, implying a rise from the year-ago figure of $885,000. The consensus estimate for net signed contracts is pegged at 2,691 units. This indicates a decline from the prior-year figure of 3,154 units.
What Our Quantitative Model Predicts
Our proven model does not conclusively predict an earnings beat for Toll Brothers this time around. That 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, that 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 #4 (Sell).
Meritage Homes Corporation (MTH - Free Report) reported solid results for second-quarter 2022 despite challenges associated with higher mortgage rates. Quarterly earnings surpassed the Zacks Consensus Estimate and increased on a year-over-year basis.
Revenues of MTH also rose from the year-ago quarter’s levels on the back of a strong housing market, thanks to a low supply of new and resale housing inventory and favorable demographics.
The company reported earnings of $123.65 per share, increased 50% from the prior-year figure of $82.45 per share. Total revenues (Homebuilding & Mortgage Banking fees combined) amounted to $2.66 billion for the reported quarter, reflecting growth of 16% on a year-over-year basis. Higher average price of settlements in the quarter and lower lumber prices led to the year-over-year improvement.
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Toll Brothers (TOL) to Post Q3 Earnings: What's in Store?
Toll Brothers, Inc. (TOL - Free Report) is scheduled to report third-quarter fiscal 2022 (ended Jul 31, 2022) results on Aug 23, after the closing bell.
In the last reported quarter, the company’s earnings and revenues surpassed the Zacks Consensus Estimate by 26.7% and 11.1%, respectively. The said metrics also increased 83.2% and 18%, respectively, from the prior year on the back of higher deliveries and prices.
On an encouraging note, earnings topped analysts’ expectations in 17 of the 18 trailing quarters.
Toll Brothers Inc. Price and EPS Surprise
Toll Brothers Inc. price-eps-surprise | Toll Brothers Inc. Quote
Trend in Estimate Revision
The Zacks Consensus Estimate for fiscal third-quarter earnings has remained unchanged at $2.30 per share over the past 60 days. The said figure indicates a 23% rise from the year-ago earnings of $1.87 per share. The consensus mark for revenues is $2.49 billion, suggesting a 10.2% year-over-year rise.
Factors to Note
Despite unprecedented supply chain issues and increased inflation, Toll Brothers’ third-quarter revenues are expected to have increased from the year-ago level, buoyed by a lack of available supply. Home sales of this luxury homebuilding company are expected to have increased in the fiscal third quarter from the year-ago level, given higher deliveries and prices.
Also, its focus on luxury move-up buyers — who already possess a residence and are looking for a shift to larger and better homes — has been commendable. Toll Brothers has been enjoying greater pricing power than other homebuilding companies as these homebuyers are less sensitive to price changes. The company has been benefiting from the strategy of broadening the product lines, price points and geographies.
During the fiscal second-quarter earnings call, TOL highlighted that it expects to record home deliveries of 2,750 units (indicating a rise from 2,597 units delivered in the prior-year period) at an average selling price or ASP of $895,000-$915,000 (suggesting a rise from $860,400 a year ago).
Toll Brothers expects adjusted home sales gross margin to be 27%, implying a rise from 25.6% recorded in the year-ago period. SG&A expenses are estimated to be 10.5% of home sales revenues, indicating no change from the year-ago period. Also, the company expects the effective tax rate to be 26%.
Meanwhile, higher land, labor and raw material costs are expected to have put pressure on fiscal third-quarter margins. Sustained supply-chain disruptions in the industry are expected to have reflected in the company’s performance.
Estimates
The Zacks Consensus Estimate for the backlog is pegged at 11,712 units, indicating growth of 9.9% year over year. The same for the average price of the backlog is pegged at $1,030,000, implying a rise from the year-ago figure of $885,000. The consensus estimate for net signed contracts is pegged at 2,691 units. This indicates a decline from the prior-year figure of 3,154 units.
What Our Quantitative Model Predicts
Our proven model does not conclusively predict an earnings beat for Toll Brothers this time around. That 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, that 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 #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank stocks here.
Recent Construction Releases
Meritage Homes Corporation (MTH - Free Report) reported solid results for second-quarter 2022 despite challenges associated with higher mortgage rates. Quarterly earnings surpassed the Zacks Consensus Estimate and increased on a year-over-year basis.
Revenues of MTH also rose from the year-ago quarter’s levels on the back of a strong housing market, thanks to a low supply of new and resale housing inventory and favorable demographics.
D.R. Horton, Inc.’s (DHI - Free Report) third-quarter fiscal 2022 earnings beat the Zacks Consensus Estimate but revenues missed the same.
DHI also lowered its revenue guidance for the full year, given expected completion dates of homes under construction and current market conditions.
NVR, Inc.’s (NVR - Free Report) second-quarter 2022 earnings missed the Zacks Consensus Estimate but revenues surpassed the same.
The company reported earnings of $123.65 per share, increased 50% from the prior-year figure of $82.45 per share. Total revenues (Homebuilding & Mortgage Banking fees combined) amounted to $2.66 billion for the reported quarter, reflecting growth of 16% on a year-over-year basis. Higher average price of settlements in the quarter and lower lumber prices led to the year-over-year improvement.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.