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Toll Brothers Inc.

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Shares of Toll Brothers have outperformed its industry over the past three months. Estimates have also been trending upward for the current year over the past 30 days. Robust economy, improving demographics and financial health of its affluent customer base bode well for Toll Brothers. Also, lack of competition in the luxury new home market is expected to drive growth for Toll Brothers as it enjoys greater pricing power than other homebuilding companies. Solid growth in revenues (up 23%) and deliveries (up 16%) in fiscal 2018, following a gain of 12% and 17%, respectively, in fiscal 2017, reflects the health of the luxury new home market. However, escalating building material and labor costs that are proving to be a drag on margins. Again, high mortgage rates dilute the demand for new homes as mortgage loans become expensive.

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