Toll Brothers Inc. (TOL - Free Report) announced the opening of the Brownstones Collection within Edge-on-Hudson in Sleepy Hollow, Westchester County, NY.
Edge-on-Hudson, Toll Brothers’ one-of-a-kind community, is a joint venture between SunCal, CA, and Diversified Realty Advisors LLC, NJ. The community is located between the Tarrytown and Philipse Manor stations. This central location makes it an ideal option for the home buyer, which is seeking proximity to New York City as well as Westchester County.
The community will include a boutique hotel, along with retail space and offices. Within the Brownstones Collection, homebuyers will be able to personalize their new home with the help of the company’s design consultants.
Toll Brothers, one of the leading builders of luxury homes, enjoys greater pricing power than other homebuilding companies, as the market generally faces limited competition. The company mostly caters to luxury move-up buyers who already possess a residence, and are looking for a shift to larger and better homes. These homebuyers are less sensitive to price changes.
Its earnings and revenues witnessed notable year-over-year growth over the past several quarters. In fact, total revenues grew 23% year over year in fiscal 2018, backed by 16% increased deliveries. Given healthy luxury new home market, Toll Brothers remains well positioned to benefit from robust economy, improving demographics and the financial health of its affluent customer base.
Although concerns surrounding affordability and rising mortgage rates are plaguing the industry of late, the recent market data related to sales, permits, starts and existing home sales has reported a decelerating growth rate, raising apprehensions about housing recovery. That said, overall fundamentals of the housing market are expected to remain positive through fiscal 2019. Strong demand trend in the U.S. housing market, driven by a deficit in production that has persisted over a decade, also bodes well for the homebuilders.
Toll Brothers is using its strong liquidity position to secure the most sought-after urban locations in the country like New York City Market, Northern New Jersey, Washington DC and Philadelphia. The company’s solid land position places it well to meet the growing demand in these regions, thus giving Toll Brothers a competitive edge over peers who are presently facing land availability constraints.
However, rising building material and labor costs are growing concerns for the company’s margin. In fourth-quarter fiscal 2018, its new orders declined for the first time in four years. Meanwhile, shares of the company have declined 10.2%, comparing favorably with its industry's fall of 20.2%.
Zacks Rank & Stocks to Consider
Currently, Toll Brothers carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the Zacks Construction sector are Masco Corporation (MAS - Free Report) , Lennox International, Inc. (LII - Free Report) and Owens Corning Inc (OC - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Masco’s earnings are expected to grow 24.2% and 12.8% in 2018 and 2019, respectively.
Lennox’s 2018 and 2019 earnings are expected to grow 18.9% and 31.3%, respectively.
Owens Corning’s earnings for 2018 and 2019 are expected to increase 7.7% and 16.6%, respectively.
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