Toll Brothers 2025 Q3 Earnings Revenue Rises 8%, Net Income Declines 1.3%

Toll Brothers reported its fiscal 2025 Q3 earnings on August 19, 2025, with revenue exceeding expectations. The results reflected a 8.0% year-over-year increase in total revenue, driven by robust home sales. However, net income declined slightly, and while EPS improved, it did not fully offset the earnings contraction. The company maintained its guidance in line with expectations.

Revenue
Toll Brothers' total revenue for Q3 2025 rose 8.0% year-over-year to $2.95 billion, with home sales accounting for the lion’s share at $2.88 billion, reflecting strong demand and pricing power. Land sales and other revenue also contributed, generating $64.14 million in the quarter. This performance underscores the company’s continued strength in core homebuilding activities amid challenging market conditions.

Earnings/Net Income
Earnings per share (EPS) increased by 3.3% to $3.76 in Q3 2025, outperforming the prior-year figure of $3.64. However, net income declined to $369.62 million, a 1.3% decrease from $374.61 million in Q3 2024. Despite the EPS growth, the overall earnings contraction signals margin pressures or cost challenges.

Price Action
The stock of Toll Brothers closed the latest trading day down 0.22%, but gained 3.03% during the most recent full week and surged 13.07% month-to-date.

Post-Earnings Price Action Review
A strategy of purchasing Toll Brothers (TOL) shares following the announcement of its revenue increase and holding for 30 days has historically yielded strong returns. Over the past three years, this approach achieved a 146.07% return, significantly outperforming the 53.10% benchmark. The excess return of 92.97% highlights the strategy's effectiveness in capturing upside from the earnings event. With a compound annual growth rate (CAGR) of 36.46%, the strategy demonstrated consistent performance, while a maximum drawdown of 0.00% and a Sharpe ratio of 0.99 indicated strong risk-adjusted returns and minimal downside exposure.

CEO Commentary
Douglas C. Yearley, Jr., chairman and chief executive officer, highlighted the company's “strong quarter,” with record home sales revenue of $2.9 billion driven by 2,959 home deliveries at an average price of $974,000. Yearley noted an adjusted gross margin of 27.5%, surpassing guidance by 25 basis points, and an SG&A margin of 8.8%, 40 basis points above expectations. He emphasized the company’s ability to maintain profitability in the face of affordability pressures and economic uncertainty, with a 4.5% increase in average new contract price to $1 million and a balanced pricing strategy to optimize returns.

Guidance
Toll Brothers expects 3,350 home deliveries in Q4 2025, with an average delivered price of $970,000 to $980,000. For the full fiscal year 2025, the company projects 11,200 total deliveries at an average price of $950,000 to $960,000. Adjusted home sales gross margin is anticipated at 27.00% for Q4 and 27.25% for the full year. SG&A is forecasted at 8.3% for Q4 and 9.4% to 9.5% for FY 2025. Other income and gross margin from land sales are expected to total $65 million in Q4 and $110 million for the year. A tax rate of 25.5% is projected for Q4 and 25.1% for FY 2025.

Additional News
Outside of its earnings report, Toll Brothers was not associated with any notable mergers, acquisitions, or executive changes in the three weeks following August 19, 2025. The company also did not announce new dividend or share repurchase programs. Meanwhile, the Shanghai Daily launched a new online subscription service for its digital edition, offering real-time downloadable PDFs of the newspaper and unlimited access to its website, including archives and breaking news. Subscribers can choose from digital-only or print+digital packages, with prices ranging from RMB 100 to RMB 820 for varying durations. Notably, online subscriptions do not include physical newspapers and are non-refundable. This initiative positions the publication to expand its reach and engage a broader, digitally-focused audience.