Toll Brothers 2025 Q4 Earnings Misses Estimates Despite Revenue Beat

Toll Brothers (TOL) reported Q4 2025 earnings that fell short of expectations despite a revenue beat. The company’s non-GAAP EPS of $4.58 missed by $0.30, while revenue rose 2.7% to $3.42 billion, exceeding estimates by $100 million. FY2026 guidance includes 10,300–10,700 home deliveries at $970k–$990k average prices, with adjusted gross margin targeting 26.0%.

Revenue

Home sales accounted for the lion’s share at $3.41 billion, while Land sales and other contributed $9.40 million. Total revenue reached $3.42 billion, reflecting a 2.7% year-over-year increase driven by higher home sales volumes and pricing discipline.

Earnings/Net Income

Earnings per share (EPS) declined 1.1% to $4.62, with net income falling 6.0% to $446.72 million. The EPS miss and net income contraction highlight margin pressures and delayed sales in the Apartment Living business.

Post-Earnings Price Action Review

The strategy of buying shares on the earnings date and holding for 30 days yielded moderate returns but underperformed the market. A 4.5% annualized return over three years lagged the S&P 500’s 9.5%, indicating challenges like volatility and sector-specific issues. Holding periods or integrating macroeconomic factors could refine this approach.

CEO Commentary

Chairman and CEO Douglas C. Yearley, Jr., emphasized disciplined execution in a “choppy environment,” with $10.8B in home sales revenue and 27.3% adjusted gross margin. The company exited the multifamily development business and plans to return $1.1B in operating cash flows to shareholders.

Guidance

FY2026 targets include 10,300–10,700 home deliveries, 26.0% adjusted gross margin, and 10.25% SG&A. Q1 2026 guidance projects 1,800–1,900 deliveries at $985k–$995k average prices.

Additional News

Toll Brothers announced plans to exit its multifamily development business, a strategic shift to focus on core homebuilding. The company also reaffirmed its commitment to returning capital to shareholders, with $750M allocated to buybacks and dividends in FY2025. Additionally, the firm emphasized expanding its “affordable luxury” segment, adjusting its build-to-order model to include more speculative, quick-move-in homes to meet evolving market demands.