As you might know, Toll Brothers, Inc. (NYSE:TOL) just kicked off its latest full-year results with some very strong numbers. The company beat expectations with revenues of US$7.2b arriving 2.7% ahead of forecasts. Earnings per share (EPS) were US$4.03, 2.4% ahead of estimates. Earnings are an important time for investors, as they can track a company's performance, look at what top analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what analysts are forecasting for next year.
Following last week's earnings report, Toll Brothers's eleven analysts are forecasting 2020 revenues to be US$7.31b, approximately in line with the last 12 months. Earnings per share are forecast to dip 3.5% to US$3.93 in the same period. Yet prior to the latest earnings, analysts had been forecasting revenues of US$7.15b and earnings per share (EPS) of US$4.07 in 2020. So it's pretty clear consensus is mixed on Toll Brothers after the latest results; while analysts lifted revenue numbers, they also administered a small dip in per-share earnings expectations.
The consensus price target was unchanged at US$41.00, suggesting the business is performing roughly in line with expectations, despite some adjustments to profit and revenue forecasts. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Toll Brothers at US$46.00 per share, while the most bearish prices it at US$35.00. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
In addition, we can look to Toll Brothers's past performance and see whether business is expected to improve, and if the company is expected to perform better than wider market. It's pretty clear that analysts expect Toll Brothers's revenue growth will slow down substantially, with revenues next year expected to grow 1.2%, compared to a historical growth rate of 14% over the past five years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 5.2% per year. So it's pretty clear that, while revenue growth is expected to slow down, analysts still expect the wider market to grow faster than Toll Brothers.
The Bottom Line
The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, analysts also upgraded their revenue estimates, although our data indicates sales are expected to perform worse than the wider market. The consensus price target held steady at US$41.00, with the latest estimates not enough to have an impact on analysts' estimated valuations.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have forecasts for Toll Brothers going out to 2022, and you can see them free on our platform here.
It might also be worth considering whether Toll Brothers's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
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