Toll Brothers Stock Down on Q1 Earnings & Revenues Miss

Toll Brothers, Inc. TOL reported first-quarter fiscal 2025 (ended Jan. 31) results, with earnings and revenues missing the Zacks Consensus Estimate and decreasing on a year-over-year basis, respectively. Shares of this leading luxury homebuilder plunged 5.6% in the after-hour trading session yesterday following the earnings release.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.The company’s net income and earnings per share (EPS) fell short due to impairments and a delayed joint venture property sale. Toll Brothers highlighted that while demand remained solid, the spring selling season has been mixed, with affordability constraints and growing inventories pressuring sales, especially at the lower end. Toll Brothers is adjusting pricing, incentives, and spec starts at the community level to maintain balance.Looking ahead, Toll Brothers remains optimistic about the long-term housing market, citing favorable demographics, a housing shortage, and rising home values. With a luxury niche and well-located communities, the company believes it is positioned for continued success.Toll Brothers Inc. Price, Consensus and EPS Surprise Toll Brothers Inc. price-consensus-eps-surprise-chart | Toll Brothers Inc. QuoteTOL’s Quarterly Earnings & Revenue DiscussionThe company reported adjusted EPS of $1.75, which fell short of the consensus estimate of $1.99 by 12.1% and declined 22.2% from the year-ago period.Total revenues (including Home sales and Land sales and others) of $1.86 billion lagged the consensus mark of $1.9 billion by 2.1% and decreased 4.6% year over year. Growth was attributable to higher deliveries.Inside Toll Brothers’ Q1 ResultsThe company’s total home sales revenues dipped 5% (below our projection of a 2% year-over-year decline) from the prior-year quarter to $1.84 billion. Homes delivered were up 3% (below our expectation of 4.6% growth year over year) from the year-ago quarter to 1,991 units. The average price of homes delivered was $924,700 for the quarter, down 7.8% from the year-ago level of $1,002,600. We had expected ASP to be down 6.3% year over year to $939,243.Net-signed contracts for the quarter were 2,307 units, up 13% year over year. The value of net signed contracts was $2.31 billion, reflecting a rise of 12% year over year. We had projected net-signed contracts to be up 19.9% in units and 19.4% in value for the quarter.At the fiscal first-quarter end, Toll Brothers had a backlog of 6,312 homes, representing a year-over-year decrease of 6%. Potential revenues from backlog declined 2% year over year to $6.94 billion. The average price of homes in the backlog was $1,099,200, up from $1,058,000 a year ago.The cancelation rate (as a percentage of signed contracts) for the reported quarter was 5.8% compared with 8.6% in the prior-year period.The company’s adjusted home sales gross margin was 26.9%, which contracted 200 basis points (bps) for the quarter. SG&A expenses, as a percentage of home sales revenues, were 13.1%, which increased 120 bps from the year-ago quarter.Toll Brothers’ Balance Sheet & Cash FlowTOL had cash and cash equivalents of $574.8 million at the fiscal first-quarter end compared with $1.3 billion at the fiscal 2024-end. The debt-to-capital ratio improved to 26% from 27% at the end of fiscal 2024. The net debt-to-capital ratio was 21.1% compared with 15.2% at the fiscal 2024-end. At the close of the first quarter of fiscal 2025, the company had $1.77 billion available on its $1.96 billion revolving credit facility, set to mature in February 2030.During the fiscal first quarter, the company bought back approximately 0.2 million shares at an average price of $127.02 per share, totaling $23.7 million.It controls 77,700 lots, 56% of which are under control rather than owned outright, ensuring sufficient land for future expansion. In February, it strengthened its balance sheet by extending loan maturities to 2030 and increasing credit facility capacity by $400 million.TOL’s Fiscal Q2 GuidanceToll Brothers expects home deliveries of 2,500-2,700 units (compared with 2,641 units delivered in the prior-year quarter) at an average price of $940,000-$960,000 (suggesting a decline from $1,002,600 a year ago).Adjusted home sales gross margin is expected to be 27.25%, implying a decline from 28.2% in the year-ago period. SG&A expenses are estimated to be 10.3% of home sales revenues, indicating a rise from 9% in the year-ago period. The company expects the effective tax rate to be 26%.What TOL Expects for Fiscal 2025For fiscal 2025, home deliveries are anticipated to be in the range of 11,200-11,600 units. The estimated range reflects growth from the fiscal 2024 level of 10,813. It expects the period-end community count to be 440-450.The average price of delivered homes is now expected to be $945,000-$965,000, indicating a decline from $976,900 in fiscal 2024.Toll Brothers expects an adjusted home sales gross margin of 27.25%. This reflects a decline from 28.4% reported in fiscal 2024.SG&A expenses, as a percentage of home sales revenues, are now projected to be 9.4%-9.5%, still an increase from 9.3% reported in fiscal 2024. The company expects the effective tax rate to be 25.5%.TOL’s Zacks Rank & Peer ReleasesToll Brothers currently carries a Zacks Rank #4 (Sell).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.NVR, Inc. NVR reported impressive fourth-quarter 2024 results, with earnings and Homebuilding revenues surpassing the Zacks Consensus Estimate. Both metrics increased on a year-over-year basis. The quarterly performance showed strong growth in settlements. Although new orders decreased in the quarter, the average selling price increased.NVR’s new orders decreased 8% from the prior-year quarter’s level to 4,794 units. However, the ASP of new orders increased 4% from the prior-year quarter’s figure to $469,000. On a unit basis, backlog at the end of Dec. 31, 2024, decreased 3% from the prior-year quarter’s figure to 9,953 homes but rose 1% on a dollar basis to $4.79 billion.D.R. Horton, Inc. DHI reported first-quarter fiscal 2025 (ended Dec. 31, 2024) results, with earnings and revenues beating Zacks Consensus Estimate but decreasing on a year-over-year basis. Despite rising home inventories, the supply of affordable homes remains constrained, while favorable demographics continue to drive housing demand.To address affordability challenges and stimulate sales, the company leveraged incentives such as mortgage rate buydowns. Additionally, D.R. Horton focused on offering smaller, affordable floor plans to align with the needs of cost-conscious homebuyers. DHI expects consolidated 2024 revenues to be in the range of $36-$37.5 billion compared with $36.8 billion in fiscal 2023. Homes closed are anticipated to be within 90,000-92,000 units.KB Home KBH reported impressive fourth-quarter fiscal 2024 results, wherein both revenues and earnings surpassed expectations. On a year-over-year basis, both metrics increased, highlighting its resilience in a fluctuating housing market.KBH’s results underscore the effectiveness of its strategy, which is driven by faster build times and a strong appetite for homeownership despite mortgage rate pressures. However, challenges such as mortgage rate headwinds and potential regulatory shifts could temper the pace of growth. While challenges remain, its strong order book and expanded community count suggest a solid growth trajectory for 2025.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is among the most innovative financial firms. With a fast-growing customer base (already 50+ million) and a diverse set of cutting edge solutions, this stock is poised for big gains. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Toll Brothers Inc. (TOL): Free Stock Analysis Report KB Home (KBH): Free Stock Analysis Report D.R. Horton, Inc. (DHI): Free Stock Analysis Report NVR, Inc. (NVR): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks