Toll Brothers, Inc. (TOL) stock climbed higher on Wednesday, fueled by the company’s better-than-expected third-quarter earnings and its optimistic outlook for the 2024 fiscal year. The luxury homebuilder reported adjusted earnings per share (EPS) of $3.60, surpassing analysts’ estimates of $3.31. Revenue also came in stronger than anticipated, reaching $2.73 billion compared to the projected $2.71 billion.
The company’s third-quarter home sales revenue rose 2% year-over-year to $2.72 billion. Toll Brothers delivered 2,814 homes during the quarter at an average price of $960,000. Despite a slight decline in the adjusted gross margin for home sales to 28.8% from 29.3% in the previous year’s third quarter, the company remains optimistic about future performance.
Douglas C. Yearley, CEO and chairman of Toll Brothers, highlighted the company’s strong performance, stating, “Net signed contracts were up year-over-year approximately 11% in both units and dollars, with July being our strongest month in the quarter. We are also encouraged by our solid deposit and traffic activity through the first three weeks of August.” He added, “With mortgage rates at their lowest point in a year and trending lower, favorable demographics, and continued imbalance in the supply and demand of homes for sale, we are optimistic that demand will remain solid through the end of fiscal 2024 and into 2025.”
Looking ahead, Toll Brothers issued optimistic guidance for the 2024 fiscal year. The company expects EPS to fall between $14.50 and $14.75, exceeding analysts’ expectations of $14.20. Toll Brothers also projects delivering between 10,650 and 10,750 homes throughout the year and anticipates 3,275 to 3,375 deliveries in the fourth quarter alone.
Following the strong earnings report, several analysts adjusted their price targets for Toll Brothers. Wedbush analyst Jay McCanless maintained a Neutral rating with a $120 price target, while Keefe, Bruyette & Woods analyst Jade Rahman i reiterated an Outperform rating and a $142 price target.
The positive news sent Toll Brothers shares soaring, up 5.41% to $140.75 at the time of publication. The stock’s strong performance reflects investor confidence in the company’s ability to navigate the evolving housing market and capitalize on continued demand for luxury homes.
