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Toll Brothers (TOL) to Post Q1 Earnings: What's in Store?

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Toll Brothers, Inc. TOL is scheduled to report first-quarter fiscal 2022 (ended on Jan 31, 2022) results on Feb 22, after the closing bell.

In the last reported quarter, the company’s earnings and revenues surpassed the Zacks Consensus Estimate by 21.7% and 4.4%, respectively. The said metrics also increased 94.8% and 19.5%, respectively, from the prior year on the back of higher deliveries and prices.

Encouragingly, earnings topped analysts’ expectations in 15 of the trailing 16 quarters.

Trend in Estimate Revision

The Zacks Consensus Estimate for fiscal first-quarter earnings has been revised downward over the past 60 days to $1.12 per share from $1.14. The said figure indicates a 47.4% increase from the year-ago earnings of 76 cents per share. The consensus mark for revenues is $1.77 billion, suggesting a 13.2% year-over-year rise.

Toll Brothers Inc. Price and EPS Surprise

Toll Brothers Inc. Price and EPS Surprise
Toll Brothers Inc. Price and EPS Surprise

Toll Brothers Inc. price-eps-surprise | Toll Brothers Inc. Quote

Factors to Note

Home sales of this luxury homebuilding company are expected to have increased in the fiscal first quarter from the year-ago level, given resilient housing market conditions in the United States backed by a highly motivated buyer and lack of available supply.

Also, its focus on luxury move-up buyers — who already possess a residence and are looking for a shift to larger and better homes — has been commendable. Toll Brothers has been enjoying greater pricing power than other homebuilding companies as these homebuyers are less sensitive to price changes. The company has been benefiting from the strategy of broadening the product lines, price points and geographies.

During the fiscal fourth-quarter earnings call, TOL highlighted that it recorded home deliveries of 2,000 units (indicating a rise from 1,777 units delivered in the prior-year period) at an average selling price or ASP of $865,000-$885,000 (suggesting a rise from $793,900 a year ago).

Toll Brothers expects adjusted home sales gross margin to be 25.5%, implying a rise from 22.9% recorded in the year-ago period. SG&A expenses, as a percentage of home sales revenues, are projected at 14.1% (indicating a decrease from the year-ago figure of 14.9%). Also, the company expects the effective tax rate to be 26%.

Meanwhile, higher land, labor and raw material costs are expected to have put pressure on fiscal first-quarter margins. Sustained supply-chain disruptions in the industry are expected to have reflected in the company’s performance.

Estimates

The Zacks Consensus Estimate for backlog is pegged at 11,108 units, indicating growth of 25% year over year. The same for the average price of the backlog is pegged at $925,000, implying a rise from the year-ago figure of $841,000. The consensus estimate for net signed contracts is pegged at 2,837 units. This indicates a marginal decline from the prior-year figure of 2,874 units.

What Our Quantitative Model Predicts

Our proven model does not conclusively predict an earnings beat for Toll Brothers this time around. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here, as you will see below.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Recent Construction Releases

Weyerhaeuser Company WY reported fourth-quarter 2021 results, wherein earnings and revenues surpassed the respective Zacks Consensus Estimate and increased year over year despite persistent supply-chain challenges and the ongoing pandemic.

Weyerhaeuser remains encouraged by strong demand fundamentals that will drive the growth of businesses. WY also remains focused on creating superior value for shareholders through its unmatched portfolio of assets, industry-leading operating performance, strong ESG foundation and disciplined capital allocation.

Martin Marietta Materials, Inc. MLM reported better-than-expected fourth-quarter 2021 results, wherein earnings and revenues (products and services) beat the respective Zacks Consensus Estimate.

Earnings and revenues of MLM also increased on a year-over-year basis backed by improved pricing across businesses as well as disciplined cost management.

D.R. Horton, Inc. DHI reported impressive results for first-quarter fiscal 2022.

D.R. Horton’s quarterly earnings and revenues beat the respective Zacks Consensus Estimate and improved on a year-over-year basis. The upside reflects a robust housing market, significant market share gains, a vast geographic footprint and varied product offerings across multiple brands.


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Martin Marietta Materials, Inc. (MLM) : Free Stock Analysis Report

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