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In the last reported quarter, the company’s earnings and revenues surpassed the Zacks Consensus Estimate by 12.3% and 8.6%, respectively. Earnings and revenues, however, decreased 12% and 18.6% from the prior-year period, respectively.
On an encouraging note, earnings topped analysts’ expectations in all the trailing four quarters, the average surprise being 29.4%.
Trend in Estimate Revision
The Zacks Consensus Estimate for the fiscal first-quarter earnings per share (EPS) has remained unchanged at $1.77 over the past 60 days. The said figure indicates 4.1% growth from the year-ago EPS of $1.70.
The consensus mark for revenues is pegged at $1.87 billion, suggesting 5.1% year-over-year growth.
Toll Brothers’ fiscal first-quarter home sales are expected to have increased from the year-ago reported level, given higher pricing. Although an increase in mortgage rates will impact the volumes to some extent, low-existing homes for sale have been driving demand for new homes in the market. This tailwind is likely to have helped the company to post higher orders in the quarter.
Moreover, apart from the lack of available supply, 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 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.
On the fiscal fourth-quarter earnings call, TOL stated that it expects 1,800-1,900 units (indicating an increase from the midpoint of the guided range from 1,826 units delivered in the prior-year quarter) at an average price of $985,000-$1,005,000 (suggesting a rise from $958,300 a year ago). Our model predicts home sales revenues will improve 4.2% year over year to $1.82 billion.
Higher land, labor and raw material costs are expected to put pressure on the fiscal first-quarter margins. That said, the company has been tightening its costs, which are expected to be reflected in its quarterly results.
Toll Brothers expects the adjusted home sales gross margin to be 28%, implying an increase from 27.5% reported in the year-ago period. SG&A expenses are estimated to be 12.4% of home sales revenues, indicating a rise from 12.1% reported in the year-ago period. The company expects the effective tax rate to be 26%. We expect the adjusted home sales gross margin to be 28.1% and SG&A expenses to be 12.4% of home sales.
Estimates
We expect net signed contracts to be around 1,903.5 units. This indicates an improvement from the prior-year reported figure of 1,454.3 units.
Our model predicts a backlog of 6,591 units, indicating a decline from 7,733 homes reported a year ago. The same for the backlog (in values) is pegged at $7.03 billion, implying a decline from the $8.58 million recorded at the first quarter of fiscal 2023-end.
What Our Quantitative Model Predicts
Our proven model does not conclusively predict an earnings beat for Toll Brothers this time around. This 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, this 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 #2.
Stocks With the Favorable Combination
Here are some other companies in the Zacks Construction sector that, according to our model, have the right combination of elements to post an earnings beat in the quarter to be reported.
JELD’s earnings topped the consensus mark in each of the last four quarters, with the average being 126.5%. Earnings for the to-be-reported quarter are expected to decline 46.8% year over year.
Floor & Decor Holdings, Inc. (FND - Free Report) has an Earnings ESP of +6.74% and a Zacks Rank #2.
FND’s earnings for the to-be-reported quarter are expected to decline 57.8%. The company reported better-than-expected earnings in three of the last four quarters and missed on one occasion while met on another, the average surprise being 4.9%.
Vulcan Materials Company (VMC - Free Report) has an Earnings ESP of +3.08% and a Zacks Rank #3.
VMC’s earnings for the to-be-reported quarter are expected to grow 25.9%. The company reported better-than-expected earnings in three of the last four quarters and missed on one occasion, the average surprise being 13.6%.
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Toll Brothers (TOL) to Post Q1 Earnings: What's in Store?
Toll Brothers, Inc. (TOL - Free Report) is scheduled to report first-quarter fiscal 2024 (ended Jan 31, 2024) results on Feb 20, after the closing bell.
In the last reported quarter, the company’s earnings and revenues surpassed the Zacks Consensus Estimate by 12.3% and 8.6%, respectively. Earnings and revenues, however, decreased 12% and 18.6% from the prior-year period, respectively.
On an encouraging note, earnings topped analysts’ expectations in all the trailing four quarters, the average surprise being 29.4%.
Trend in Estimate Revision
The Zacks Consensus Estimate for the fiscal first-quarter earnings per share (EPS) has remained unchanged at $1.77 over the past 60 days. The said figure indicates 4.1% growth from the year-ago EPS of $1.70.
The consensus mark for revenues is pegged at $1.87 billion, suggesting 5.1% year-over-year growth.
Toll Brothers Inc. Price and EPS Surprise
Toll Brothers Inc. price-eps-surprise | Toll Brothers Inc. Quote
Factors to Note
Toll Brothers’ fiscal first-quarter home sales are expected to have increased from the year-ago reported level, given higher pricing. Although an increase in mortgage rates will impact the volumes to some extent, low-existing homes for sale have been driving demand for new homes in the market. This tailwind is likely to have helped the company to post higher orders in the quarter.
Moreover, apart from the lack of available supply, 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 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.
On the fiscal fourth-quarter earnings call, TOL stated that it expects 1,800-1,900 units (indicating an increase from the midpoint of the guided range from 1,826 units delivered in the prior-year quarter) at an average price of $985,000-$1,005,000 (suggesting a rise from $958,300 a year ago). Our model predicts home sales revenues will improve 4.2% year over year to $1.82 billion.
Higher land, labor and raw material costs are expected to put pressure on the fiscal first-quarter margins. That said, the company has been tightening its costs, which are expected to be reflected in its quarterly results.
Toll Brothers expects the adjusted home sales gross margin to be 28%, implying an increase from 27.5% reported in the year-ago period. SG&A expenses are estimated to be 12.4% of home sales revenues, indicating a rise from 12.1% reported in the year-ago period. The company expects the effective tax rate to be 26%. We expect the adjusted home sales gross margin to be 28.1% and SG&A expenses to be 12.4% of home sales.
Estimates
We expect net signed contracts to be around 1,903.5 units. This indicates an improvement from the prior-year reported figure of 1,454.3 units.
Our model predicts a backlog of 6,591 units, indicating a decline from 7,733 homes reported a year ago. The same for the backlog (in values) is pegged at $7.03 billion, implying a decline from the $8.58 million recorded at the first quarter of fiscal 2023-end.
What Our Quantitative Model Predicts
Our proven model does not conclusively predict an earnings beat for Toll Brothers this time around. This 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, this 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 #2.
Stocks With the Favorable Combination
Here are some other companies in the Zacks Construction sector that, according to our model, have the right combination of elements to post an earnings beat in the quarter to be reported.
JELD-WEN Holding, Inc. (JELD - Free Report) has an Earnings ESP of +10.90% and has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
JELD’s earnings topped the consensus mark in each of the last four quarters, with the average being 126.5%. Earnings for the to-be-reported quarter are expected to decline 46.8% year over year.
Floor & Decor Holdings, Inc. (FND - Free Report) has an Earnings ESP of +6.74% and a Zacks Rank #2.
FND’s earnings for the to-be-reported quarter are expected to decline 57.8%. The company reported better-than-expected earnings in three of the last four quarters and missed on one occasion while met on another, the average surprise being 4.9%.
Vulcan Materials Company (VMC - Free Report) has an Earnings ESP of +3.08% and a Zacks Rank #3.
VMC’s earnings for the to-be-reported quarter are expected to grow 25.9%. The company reported better-than-expected earnings in three of the last four quarters and missed on one occasion, the average surprise being 13.6%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.