Zacks Investment Ideas feature highlights: Toll Brothers

For Immediate ReleaseChicago, IL – February 20, 2025 – Today, Zacks Investment Ideas feature highlights Toll Brothers TOL.Homebuilders Trade Lower After Toll Brothers DisappointsThe 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 PathIn 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 EstimatesToll 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 LineDespite 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 ContactZacks Investment Research800-767-3771 ext. 9339support@zacks.comhttps://www.zacks.comPast 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.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want 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 ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks