Toll Brothers Earnings: Swings Up, Tops Estimates on Housing Recovery

Toll Brothers Inc. (NYSE:TOL) climbed to a profit in the second quarter and beat Wall Street’s expectations in the process. Toll Brothers designs, builds, markets and arranges financing for single-family detached and attached homes in luxury residential communities.

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Toll Brothers Earnings Cheat Sheet for the Second Quarter

Results: Reported a profit of $16.9 million (10 cents per diluted share) in the quarter. Toll Brothers Inc. had a net loss of $20.8 million or a loss 12 cents per share in the year-earlier quarter.

Revenue: Rose 16.9% to $373.7 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Toll Brothers Inc. beat the mean analyst estimate of 4 cents per share. It fell short of the average revenue estimate of $382 million.

Quoting Management: Douglas C. Yearley, Jr., Toll Brothers’ chief executive officer, stated, “It appears that the housing market has moved into a new and stronger phase of recovery as we have experienced broad-based improvement across most of our regions over the past six months. The spring selling season has been the most robust and sustained since the downturn began. Even now, for the first three weeks of May, our non-binding reservation deposits, a leading indicator of future contracts, are running 39% ahead on a gross basis, and 23% ahead on a per-community basis, compared to last year’s same May period.”

Key Stats:

The company topped expectations last quarter after falling short of forecasts in the first quarter with a loss of 2 cents versus a mean estimate of net income of 3 cents per share.

Gross margins increased 4.3 percentage points to 17.9%. The growth was likely driven by increased revenue, as the figure rose 16.9% from the year-earlier quarter, while costs rose 11%.

The company reported a profit last quarter, following a quarter of being in the red. In the fourth quarter of the last fiscal year, the company booked a net loss of $15 million, or a loss of 9 cents per share.

Revenue rose last quarter after dropping in the previous quarter. Revenue fell 3.6% to $322 million in the first quarter from the year earlier.

Looking Forward: For next quarter, analysts have a more positive outlook about the company’s expected results. The average estimate for the third quarter is 14 cents per share, up from 12 cents ninety days ago. For the fiscal year, the average estimate has moved up from 33 cents a share to 34 cents over the last sixty days.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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