Toll Brothers Faces Dim Fiscal Q3 Outlook, RBC Predicts

Toll Brothers is expected to have a dim setup for its fiscal Q3 results, according to RBC. The luxury home builder has been facing challenges in the US market, and its performance is likely to be impacted by the ongoing economic uncertainty and the rise in mortgage rates.

Toll Brothers Inc. (TOL) is expected to report its third-quarter (Q3) results on Tuesday, with RBC analysts predicting a challenging setup for the luxury home builder. The company has faced significant headwinds in the U.S. market, and its performance is likely to be impacted by ongoing economic uncertainty and the rise in mortgage rates [1].

According to RBC, Toll Brothers is expected to report earnings of $3.59 per share, representing a decline of 0.3% compared to the year-ago period. The company is also forecasted to report revenues of $2.85 billion, an increase of 4.6% year over year [2]. While these figures indicate a slight improvement in revenue, the earnings per share (EPS) decline suggests that the company may be facing cost pressures.

Analysts have highlighted several key metrics to watch for in Toll Brothers' Q3 results. The company is expected to report revenues from home sales of $2.84 billion, with a year-over-year change of +4.4%. Revenues from land sales are forecasted to reach $16.34 million, indicating a significant increase of +370.6% from the prior-year quarter [2]. The closed/delivered units are estimated at 2,919, up from 2,814 units in the same quarter last year [2].

Toll Brothers' backlog of units is expected to be 5,795, down from 6,769 units in the same quarter last year [2]. The average delivered price per unit is forecasted to reach $973.32, compared to the previous year's $968.20 [2]. The company is also expected to report a net contracts figure of 2,651 units, up from 2,490 units in the prior year [2].

Despite the challenges, Toll Brothers' shares have shown resilience. The stock has returned +14.2% over the past month, outperforming the S&P 500's +3.5% change [2]. The company's luxury home development model and strong cash flow of $420.25 million have been noted by analysts as positive factors [3]. However, the stock's volatility, as indicated by a beta of 1.33, may attract short-term traders but deter long-term investors [3].

In addition to its financial performance, Toll Brothers has been expanding its portfolio. The company recently launched sales at its new Enclave at Sprain Brook townhome community in Yonkers, New York. This development features 28 luxury townhomes with prices starting at $1.079 million [4].

As Toll Brothers prepares to release its Q3 results, investors and financial professionals will be closely watching the company's performance and its ability to navigate the challenges in the U.S. housing market.

References:

[1] https://finimize.com/content/toll-brothers-set-to-deliver-steady-q3-results
[2] https://www.nasdaq.com/articles/insights-toll-brothers-tol-q3-wall-street-projections-key-metrics
[3] https://www.ainvest.com/news/toll-brothers-climbs-406th-trading-volume-luxury-builder-outpaces-housing-sector-ytd-gains-2508/
[4] https://www.stocktitan.net/news/TOL/toll-brothers-opens-enclave-at-sprain-brook-luxury-townhome-qd4gknrc10np.html