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In the last reported quarter, the company’s earnings and revenues surpassed the Zacks Consensus Estimate by 24.1% and 2.2%, respectively. Earnings increased 37.1% but revenues declined 0.6% from the prior year.
On an encouraging note, earnings topped analysts’ expectations in 20 of the 21 trailing quarters.
The Zacks Consensus Estimate for the fiscal second-quarter earnings has been unchanged at $1.89 over the past 60 days. The said figure indicates a 2.2% rise from year-ago earnings of $1.85 per share. The consensus mark for revenues is pegged at $2.07 billion, suggesting a 9.3% year-over-year decrease.
Factors to Note
Toll Brothers’ fiscal second-quarter home sales are expected to have decreased from the year-ago reported level despite higher pricing due to ongoing challenges in the industry comprising a softer demand environment. The increase in mortgage rates since March 2022, along with uncertain macroeconomic conditions, has been playing the spoilsport.
Nonetheless, the normal spring selling season is expected to have benefited Toll Brothers and other homebuilders in the quarter under review. Despite difficult macroeconomic conditions and affordability issues, stable demand condition is a blessing for homebuilders like Toll Brothers. Moreover, a lack of available supply and 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 these 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.
Toll Brothers has replenished its supply of spec homes earlier this year and improved its community count to take advantage of a positive selling environment (comprising solid demand, shorter cycle times and steady building costs) in the spring selling season.
In the fiscal first-quarter earnings call, TOL expected home deliveries of 2,050-2,150 units (indicating a decrease from 2,407 units delivered in the prior-year quarter) at an average price of $980,000-$1,00,000 (suggesting a rise from $908,400 reported a year ago).
We expect home sales revenues to decline 6.8% year over year to $2.04 billion but witness an increase from $1,749.4 million reported in the prior quarter.
Unprecedented supply-chain issues, increased inflation, and higher land, labor and raw material costs are expected to have put pressure on fiscal second-quarter margins. That said, the company has been tightening its costs, which are expected to get reflected in its quarterly results.
Toll Brothers expects the adjusted home sales gross margin to be 27%, implying an increase from 26.1% reported in the year-ago period. SG&A expenses are estimated to be 11.2% of home sales revenues, indicating a slight rise from 11.1% reported in the year-ago period. The company expects the effective tax rate to be 26%.
Estimates
The Zacks Consensus Estimate for the backlog is pegged at 7,727 units, indicating a decline from the $11,768 million reported a year ago. The same for the backlog (in values) is pegged at $8,296 million, implying a decline from the $11,0706 million recorded at the end of second-quarter fiscal 2022. The consensus estimate for net signed contracts is pegged at 2,074 units. This indicates a decline from the prior-year reported figure of 2,874 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.
Quanta Services Inc. (PWR - Free Report) reported better-than-expected results for first-quarter 2023, wherein adjusted earnings and revenues surpassed the Zacks Consensus Estimate.
The company has been experiencing high demand for its infrastructure solutions that support energy transition initiatives, and increase reliability, safety and efficiency. Notably, project activities associated with renewable generation have been going strong and are expected to continue throughout the year.
KBR, Inc. (KBR - Free Report) reported strong results in first-quarter 2023, wherein earnings and revenues surpassed the Zacks Consensus Estimate and increased on a year-over-year basis.
KBR’s top and bottom lines gained on strong underlying growth and margin expansion, as well as excellent bookings in the reported quarter.
Fluor Corporation (FLR - Free Report) reported mixed results for first-quarter 2023. Earnings missed the Zacks Consensus Estimate but increased from the previous year. Revenues surpassed the consensus mark and grew from the year-ago level.
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Toll Brothers (TOL) to Post Q2 Earnings: What to Expect?
Toll Brothers, Inc. (TOL - Free Report) is scheduled to report second-quarter fiscal 2023 (ended Apr 30, 2023) results on May 23, after the closing bell.
In the last reported quarter, the company’s earnings and revenues surpassed the Zacks Consensus Estimate by 24.1% and 2.2%, respectively. Earnings increased 37.1% but revenues declined 0.6% from the prior year.
On an encouraging note, earnings topped analysts’ expectations in 20 of the 21 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 the fiscal second-quarter earnings has been unchanged at $1.89 over the past 60 days. The said figure indicates a 2.2% rise from year-ago earnings of $1.85 per share. The consensus mark for revenues is pegged at $2.07 billion, suggesting a 9.3% year-over-year decrease.
Factors to Note
Toll Brothers’ fiscal second-quarter home sales are expected to have decreased from the year-ago reported level despite higher pricing due to ongoing challenges in the industry comprising a softer demand environment. The increase in mortgage rates since March 2022, along with uncertain macroeconomic conditions, has been playing the spoilsport.
Nonetheless, the normal spring selling season is expected to have benefited Toll Brothers and other homebuilders in the quarter under review. Despite difficult macroeconomic conditions and affordability issues, stable demand condition is a blessing for homebuilders like Toll Brothers. Moreover, a lack of available supply and 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 these 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.
Toll Brothers has replenished its supply of spec homes earlier this year and improved its community count to take advantage of a positive selling environment (comprising solid demand, shorter cycle times and steady building costs) in the spring selling season.
In the fiscal first-quarter earnings call, TOL expected home deliveries of 2,050-2,150 units (indicating a decrease from 2,407 units delivered in the prior-year quarter) at an average price of $980,000-$1,00,000 (suggesting a rise from $908,400 reported a year ago).
We expect home sales revenues to decline 6.8% year over year to $2.04 billion but witness an increase from $1,749.4 million reported in the prior quarter.
Unprecedented supply-chain issues, increased inflation, and higher land, labor and raw material costs are expected to have put pressure on fiscal second-quarter margins. That said, the company has been tightening its costs, which are expected to get reflected in its quarterly results.
Toll Brothers expects the adjusted home sales gross margin to be 27%, implying an increase from 26.1% reported in the year-ago period. SG&A expenses are estimated to be 11.2% of home sales revenues, indicating a slight rise from 11.1% reported in the year-ago period. The company expects the effective tax rate to be 26%.
Estimates
The Zacks Consensus Estimate for the backlog is pegged at 7,727 units, indicating a decline from the $11,768 million reported a year ago. The same for the backlog (in values) is pegged at $8,296 million, implying a decline from the $11,0706 million recorded at the end of second-quarter fiscal 2022. The consensus estimate for net signed contracts is pegged at 2,074 units. This indicates a decline from the prior-year reported figure of 2,874 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 #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Recent Construction Releases
Quanta Services Inc. (PWR - Free Report) reported better-than-expected results for first-quarter 2023, wherein adjusted earnings and revenues surpassed the Zacks Consensus Estimate.
The company has been experiencing high demand for its infrastructure solutions that support energy transition initiatives, and increase reliability, safety and efficiency. Notably, project activities associated with renewable generation have been going strong and are expected to continue throughout the year.
KBR, Inc. (KBR - Free Report) reported strong results in first-quarter 2023, wherein earnings and revenues surpassed the Zacks Consensus Estimate and increased on a year-over-year basis.
KBR’s top and bottom lines gained on strong underlying growth and margin expansion, as well as excellent bookings in the reported quarter.
Fluor Corporation (FLR - Free Report) reported mixed results for first-quarter 2023. Earnings missed the Zacks Consensus Estimate but increased from the previous year. Revenues surpassed the consensus mark and grew from the year-ago level.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.