Toll Brothers raises fiscal delivery guidance as it sees a strong start to the Spring selling season

$TOL(TOL)

Toll Brothers (TOL), a luxury homebuilder, reported its fiscal first-quarter earnings after the market closed on Tuesday, surpassing analyst expectations. The company's shares rose in after-hours trading following the report. 

Toll Brothers reported a year-over-year jump in their recent first-quarter revenue, charting $1.95 billion, a 9.4% higher revenue hitch than last year's same quarter. Earnings per share (EPS) significantly exceeded expectations, recording $2.25 against the forecasted $1.78. The financial update not only highlights a robust growth in home sales and significant land transaction post-quarter but also spotlights a sizeable leap in the housing market, with Toll's backlogged construction works and high SF&A efficiency contributing to its solid flight. 

Toll Brothers delivered 1,927 homes in the first quarter, generating home sales revenues of $1.93 billion. The company's adjusted gross margin in the quarter was 28.9%, a 140-basis point increase compared to the same quarter in the previous year. 

The company's SG&A expense as a percentage of home sales revenues improved by 20 basis points year-over-year to 11.9%. 

The company's strong first-quarter performance was attributed to a strong start to the spring selling season. The company's CEO, Douglas C. Yearley, Jr., stated, With a healthy job market, improving consumer sentiment, and continued low levels of resale inventory, we are optimistic that demand for new homes will remain strong in 2024. 

Toll Brothers raised its full-year guidance, expecting to deliver homes in a range of 10,000 to 10,500 units, up from a range of 9,850 to 10,350 units. The company expects to deliver 2,400 to 2,500 homes in the second quarter. The company's strong performance and positive outlook are a positive early sign for the housing market this year. 

Mortgage rates have moved higher recently but remain well below their peak near 8% last year. 

Toll Brothers' shares closed up 1.3% and were up 3% in after-hours trading on Tuesday following the earnings report. The stock had rebounded from the 50-day line and was sitting just above $105 which represents a key resistance level. The stock had formed a flat base after a strong run from a mid-November cup-with-handle breakout, which was fueled in large part by mortgage rates tumbling from long-term highs.

In conclusion, Toll Brothers' strong first-quarter performance and positive outlook are a positive sign for the housing market this year. The company's ability to deliver homes at an average price of approximately $1 million and its adjusted gross margin of 28.9% demonstrate its resilience in the face of challenging market conditions. With a healthy job market, improving consumer sentiment, and low levels of resale inventory, the company is optimistic about the demand for new homes in 2024 .