We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Chicago, IL – February 20, 2025 – Today, Zacks Investment Ideas feature highlights Toll Brothers (TOL - Free Report) .
Homebuilders Trade Lower After Toll Brothers Disappoints
The theme this earnings season has been one of expansion as more sectors experience year-over-year growth. Thus far, the percentage of S&P 500 stocks that are outperforming the index is on pace to exceed that of last year.
Last week was the third consecutive such stretch where we saw markets hit with a sizable morning gap down due to disruptive news. From tariffs and DeepSeek – to last week’s hotter-than-expected inflation data – the market has faced several major headwinds. Its ability to absorb seemingly negative news and rebound in a strong manner speaks to the underlying demand for stocks in this environment.
Unfortunately for homebuilders, they’ve been left in the dust.
Sticky Inflation Casts Doubt on Rate Path
In general, homebuilders are feeling less optimistic about the housing market amid high costs and elevated mortgage rates. The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index registered at 42 in February, a 5-point drop from January and the lowest level in 5 months.
Inflation data from January showed part of the Fed’s job – maintaining stable prices – remains quite difficult. The producer price index (PPI) showed wholesale prices rose 0.4% last month, more than the 0.3% projection. January’s PPI rose 3.5% from a year ago.
On the consumer end, headline CPI showed prices increased 3% over the prior year in January, an uptick from December’s 2.9% annual gain. On a monthly basis, headline inflation rose 0.4%.
Excluding food and energy, the “core” CPI displayed an annual increase of 3.3%, while the core measure rose 0.4% on a monthly basis. All figures were above forecasts and higher than those from December.
Notably, market participants pared back bets on interest rate cuts this year, pricing in just one cut following the data.
Toll Brothers Falls Short of Estimates
Toll Brothers appears to be the latest victim. Yesterday evening, the luxury homebuilder came out with fiscal first-quarter earnings of $1.75 per share, missing the Zacks Consensus Estimate of $1.99/share by 12.06%. The bottom line plunged 22.2% from the year-ago period. Revenues of $1.86 billion also fell short of projections and decreased 4.6% year-over-year.
The important metrics came in light primarily due to impairments and a delayed joint venture property sale. But management noted that affordability constraints and growing inventories are pressuring sales.
The fact that mortgage rates remain high is certainly taking a toll on signing activity in the housing market. A shortage of buildable lots and skilled labor is also limiting home production.
The recent miss was the second such event over the past four quarters. Toll Brothers, a Zacks Rank #4 (Sell), has delivered a trailing four-quarter average earnings surprise of -3.2%.
TOL stock was down more than 8% early Wednesday morning before paring some of the losses.
Bottom Line
Despite weakness from homebuilders, the results out of the Q4 earnings season speak to a resilient corporate backdrop. Total S&P 500 earnings are expected to be up 13.3% from the same period last year on 5.5% higher revenues.
Nearly 400 companies are set to report quarterly results in the shortened trading week ahead, including more than 40 S&P 500 companies. Be sure to stay abreast of the latest reports as the fourth-quarter earnings season continues to wind down.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.7% average gain per year. Amazingly, they soared with average gains of +48.4%, +50.2% and +56.7% per year.
Today you can access their live picks without cost or obligation.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Zacks Investment Ideas feature highlights: Toll Brothers
For Immediate Release
Chicago, IL – February 20, 2025 – Today, Zacks Investment Ideas feature highlights Toll Brothers (TOL - Free Report) .
Homebuilders Trade Lower After Toll Brothers Disappoints
The theme this earnings season has been one of expansion as more sectors experience year-over-year growth. Thus far, the percentage of S&P 500 stocks that are outperforming the index is on pace to exceed that of last year.
Last week was the third consecutive such stretch where we saw markets hit with a sizable morning gap down due to disruptive news. From tariffs and DeepSeek – to last week’s hotter-than-expected inflation data – the market has faced several major headwinds. Its ability to absorb seemingly negative news and rebound in a strong manner speaks to the underlying demand for stocks in this environment.
Unfortunately for homebuilders, they’ve been left in the dust.
Sticky Inflation Casts Doubt on Rate Path
In general, homebuilders are feeling less optimistic about the housing market amid high costs and elevated mortgage rates. The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index registered at 42 in February, a 5-point drop from January and the lowest level in 5 months.
Inflation data from January showed part of the Fed’s job – maintaining stable prices – remains quite difficult. The producer price index (PPI) showed wholesale prices rose 0.4% last month, more than the 0.3% projection. January’s PPI rose 3.5% from a year ago.
On the consumer end, headline CPI showed prices increased 3% over the prior year in January, an uptick from December’s 2.9% annual gain. On a monthly basis, headline inflation rose 0.4%.
Excluding food and energy, the “core” CPI displayed an annual increase of 3.3%, while the core measure rose 0.4% on a monthly basis. All figures were above forecasts and higher than those from December.
Notably, market participants pared back bets on interest rate cuts this year, pricing in just one cut following the data.
Toll Brothers Falls Short of Estimates
Toll Brothers appears to be the latest victim. Yesterday evening, the luxury homebuilder came out with fiscal first-quarter earnings of $1.75 per share, missing the Zacks Consensus Estimate of $1.99/share by 12.06%. The bottom line plunged 22.2% from the year-ago period. Revenues of $1.86 billion also fell short of projections and decreased 4.6% year-over-year.
The important metrics came in light primarily due to impairments and a delayed joint venture property sale. But management noted that affordability constraints and growing inventories are pressuring sales.
The fact that mortgage rates remain high is certainly taking a toll on signing activity in the housing market. A shortage of buildable lots and skilled labor is also limiting home production.
The recent miss was the second such event over the past four quarters. Toll Brothers, a Zacks Rank #4 (Sell), has delivered a trailing four-quarter average earnings surprise of -3.2%.
TOL stock was down more than 8% early Wednesday morning before paring some of the losses.
Bottom Line
Despite weakness from homebuilders, the results out of the Q4 earnings season speak to a resilient corporate backdrop. Total S&P 500 earnings are expected to be up 13.3% from the same period last year on 5.5% higher revenues.
Nearly 400 companies are set to report quarterly results in the shortened trading week ahead, including more than 40 S&P 500 companies. Be sure to stay abreast of the latest reports as the fourth-quarter earnings season continues to wind down.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.7% average gain per year. Amazingly, they soared with average gains of +48.4%, +50.2% and +56.7% per year.
Today you can access their live picks without cost or obligation.
See Stocks Free >>
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
support@zacks.com
https://www.zacks.com
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.