Toll Brothers (TOL) delivered impressive third-quarter financial results, exceeding analysts’ expectations and sending its stock price higher. The luxury homebuilder reported revenue of $2.73 billion, surpassing the consensus estimate of $2.71 billion. Adjusted earnings per share came in at $3.60, beating the anticipated $3.31. This positive performance signals continued strength in the housing market despite broader economic uncertainty.
The company’s strong performance was driven by a surge in home sales. Revenue from home sales rose 2% year-over-year to $2.72 billion, fueled by an 11% increase in homes delivered, reaching 2,814 units. Notably, net signed contract value, a key indicator of future sales, jumped 11% year-over-year, with 2,490 homes contracted. This reflects growing demand for Toll Brothers’ luxury homes.
Looking ahead, Toll Brothers is optimistic about its prospects. The company anticipates delivering between 3,275 and 3,375 units in the fourth quarter, with an adjusted home sales gross margin of 27.5%. Furthermore, Toll Brothers has raised its full-year guidance across all key home-building metrics. They expect to deliver between 10,650 and 10,750 units in full-year 2024, with an adjusted home sales gross margin of 28.3%. Earnings for the full year are projected to be in the range of $14.50 to $14.75 per share, exceeding analysts’ estimates of $14.20.
The positive outlook from Toll Brothers has fueled analyst optimism. Several firms have raised their price targets on the stock following the earnings announcement. B of A Securities maintained a Buy rating and increased their price target from $150 to $160. Oppenheimer raised their price target from $157 to $168, maintaining an Outperform rating. Barclays, while maintaining an Underweight rating, raised their price target from $116 to $135. Wells Fargo increased their price target from $150 to $160, retaining an Overweight rating. RBC Capital, maintaining an Outperform rating, raised their price target from $130 to $143.
Toll Brothers’ strong performance and positive outlook underscore the resilience of the luxury homebuilding sector. The company’s focus on quality construction and desirable locations continues to attract buyers in a challenging economic environment. Investors will be closely watching Toll Brothers’ progress in the coming quarters as the company navigates the evolving market landscape.
