Toll Brothers 2025 Q4 Earnings Revenue Beats Estimates, EPS Misses, Net Income Dips 6.0%

Toll Brothers (TOL) reported mixed Q4 2025 results, with revenue exceeding expectations but earnings per share (EPS) falling short. The company’s revenue rose 2.7% year-over-year to $3.42 billion, outpacing the $3.32 billion consensus estimate. However, non-GAAP EPS of $4.58 missed the $4.88 forecast by $0.30. Management provided FY 2026 guidance in line with expectations, projecting 10,300–10,700 home deliveries and 26.0% adjusted gross margin.

Revenue

Home sales accounted for the vast majority of revenue, generating $3.41 billion, while land sales and other segments contributed $9.40 million. The 2.7% year-over-year increase was driven by strong demand in the luxury housing market, though segment performance remained heavily skewed toward homebuilding.

Earnings/Net Income

Net income declined 6.0% to $446.72 million in Q4 2025, compared to $475.41 million in the prior-year period. EPS also fell 1.1% to $4.62, reflecting margin pressures and the delayed closing of the Apartment Living portfolio sale. The EPS shortfall highlights operational challenges despite revenue growth.

Post-Earnings Price Action Review

The strategy of buying Toll Brothers shares on earnings release dates and holding for 30 days yielded a 4.5% annualized return over three years, underperforming the S&P 500’s 9.5%. While capturing short-term momentum from earnings announcements, the approach faced headwinds from market volatility and sector-specific dynamics. Holding periods shorter than 30 days may amplify risks, whereas extending the horizon could align better with broader market trends. Adjusting the strategy to incorporate macroeconomic signals or sector rotations might enhance returns.

CEO Commentary

CEO Douglas C. Yearley emphasized fiscal 2025’s record $10.8 billion in home sales revenues and 27.3% adjusted gross margin. He noted the exit from the multifamily development business, which delayed Q4 results, and outlined plans for 8–10% community growth in 2026 while prioritizing capital efficiency.

Guidance

For FY 2026, Toll Brothers anticipates 10,300–10,700 home deliveries at an average price of $970,000–$990,000, with 26.0% adjusted gross margin and 10.25% SG&A. Q1 2026 guidance includes 1,800–1,900 deliveries and $985,000–$995,000 average prices.

Additional News

1. Strategic Exit from Multifamily Development: Toll Brothers finalized the sale of its Apartment Living portfolio, exiting the multifamily development business to focus on core homebuilding operations.

2. Capital Allocation Focus: The CEO reiterated a commitment to selective land acquisitions and disciplined inventory management to enhance capital efficiency.

3. Shareholder Returns: The company plans to maintain strong operating cash flows and prioritize shareholder returns through dividends and buybacks, aligning with its 2025 performance of $750 million returned to shareholders.