Housing
Toll Brothers Forecast Undermines Q2 Results
Published:
Last Updated:
Toll Brothers Inc. (NYSE: TOL) reported third-quarter fiscal 2016 results before markets opened Tuesday. The luxury homebuilder reported diluted earnings per share (EPS) of $0.61 on revenues of $1.27 billion. In the same period a year ago, Toll Brothers reported EPS of $0.36 on revenue of $1.03 billion. Third-quarter results also compare to the Thomson Reuters consensus estimates for EPS of $0.61 and $1.25 billion in revenue.
The company has been able to bolster its average price for a delivered home from $724,000 in the third quarter a year ago to $843,000. The average price of net signed contracts slipped slightly year-over-year from $834,000 to $831,000. Toll Brothers delivered 1,507 units in the quarter and reported 5,181 units in its backlog with an average price per home of $844,000.
The average price for a delivered home in the second quarter was $855,500 and the average price of net signed contracts was $825,500. Deliveries and backlog rose sequentially.
Gross margin improved from 19.8% in the year-ago quarter to 21.9%.
CEO Douglas Yearley said:
Our net income rose 58% this quarter versus one year ago, driven by a 24% increase in revenue, a 210 basis point improvement in gross margin and a 70 basis point decline in SG&A, as a percentage of revenue, compared to the third quarter of  FY 2015. … In our third quarter, every region showed growth in contracts of anywhere from 9% to 29% in dollars and 7% to 36% in units. Each region contributed significantly. Of the $1.45 billion in contracts signed this quarter, the North contributed 17%, the Mid-Atlantic 17%, the South 17%, the West 19%, California 25% and City Living 5%.
Toll Brothers narrowed its guidance and now says the company expects to deliver between 5,900 and 6,200 new homes during its 2016 fiscal year at an average delivered price between $815,000 and $835,000. The average price has dipped by $5,000 on the low end and $15,000 at the high end.
The company’s chief financial officer also said Toll Brothers expects adjusted gross margin for the year to fall in a range of 25.6% to 25.8%. At the end of the prior quarter the company had forecast gross margin of 25.8% to 26.2%.
Shares were down about 2.2% in premarket trading Tuesday to $28.70, in a 52-week range of $23.75 to $38.55. The consensus 12-month price target on the stock is $36.38
Take This Retirement Quiz To Get Matched With A Financial Advisor (Sponsored)
Take the quiz below to get matched with a financial advisor today.
Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests.
Here’s how it works:
1. Answer SmartAsset advisor match quiz
2. Review your pre-screened matches at your leisure. Check out the
advisors’ profiles.
3. Speak with advisors at no cost to you. Have an introductory call on the phone or introduction in person and choose whom to work with in the future
Take the retirement quiz right here.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Editors' Picks
