Key Takeaways:
Toll Brothers reported fiscal third-quarter earnings of $2.97 a share, beating the $2.93 consensus, as resilient demand from affluent buyers offset a softer housing market.
"We continue to produce solid results in a challenging housing market," Executive Chairman Doug Yearley said.
Revenue came in at $2.66 billion, topping the $2.62 billion estimate by 1.5 percent, though both metrics declined from a year earlier. EPS fell 20.4 percent from $3.73, and revenue dropped 7.9 percent from $2.88 billion in Q3 2025. The Philadelphia-based luxury homebuilder delivered 2,662 homes at an average price of about $996,000, above the high end of its guidance range.
Shares rose 7.05 percent to $152.93 in after-hours trading. The company reaffirmed its full-year adjusted gross margin of 26.1 percent, narrowed its delivery outlook to 10,500 to 10,600 homes, and raised its share repurchase target to $700 million from $650 million.
Adjusted gross margin came in at 25.6 percent, 35 basis points above guidance, marking the 15th consecutive quarter Toll Brothers has beaten its margin outlook. Net signed contracts rose 5 percent to 2,508 units, with contract value up 4 percent to $2.5 billion. The luxury move-up segment accounted for 61 percent of home sales revenue, and about 25 percent of buyers paid all cash, with an average loan-to-value of 69 percent among financed customers.
The South region led geographic segments with $655.8 million in revenue, though that was down 13.5 percent year over year. Management cited softer conditions in Texas, Seattle, Portland, San Francisco and Atlanta, while Florida, Boston through the Carolinas, Boise, Las Vegas, Reno and Denver were stronger. Incentives averaged 7.5 percent of gross sales price, down modestly from about 8 percent a year earlier, and finished spec inventory fell to 1.9 homes per community from 2.8 at the start of fiscal 2026.
The company ended the quarter with 471 selling communities, up from 420 a year earlier, and expects 480 to 490 by fiscal year-end. Net debt-to-capital stood at 15.6 percent, down from 19.3 percent a year ago, with about $3.3 billion in liquidity. Wall Street holds 10 buy, five hold and one sell rating on the stock.
The results reinforce a pattern of steady execution in a housing market pressured by elevated mortgage rates and weak consumer confidence. Investors will watch the fourth-quarter delivery pace of 3,450 to 3,550 homes and whether the company's 8 percent to 10 percent community count growth continues into fiscal 2027.
This article is for informational purposes only and does not constitute investment advice.
