On Wednesday, UBS reiterated its Buy rating on Toll Brothers (NYSE:TOL) stock, with a sustained price target of $154.00. The luxury homebuilder reported third-quarter adjusted earnings per share (EPS) of $3.60, surpassing UBS's estimate of $3.23 and the consensus of $3.35.
The higher-than-anticipated results were attributed to robust home sales revenue of $2.72 billion, outperforming UBS's projection of $2.68 billion and the consensus of $2.71 billion.
Additionally, the adjusted gross margin for home sales, excluding impairments and interest expense amortization, reached 28.8%, exceeding UBS's forecast of 27.7% and the consensus of 27.6%.
Despite the 10.9% year-over-year growth in orders in the third quarter, which fell short of UBS's expectations of a 23.2% increase and the consensus of a 24.7% rise, the performance was deemed solid in light of the mortgage rate volatility during the period.
Toll Brothers' peers also generally missed consensus order expectations, making the company's results anticipated. The firm highlighted that Toll Brothers experienced its strongest sales month in July, which may alleviate concerns arising from softer industry housing starts data.
Toll Brothers expressed optimism about the housing market, noting encouraging customer traffic and deposit activity in the first three weeks of August.
The company anticipates sustained demand leading into 2025, partly supported by lower interest rates. In a positive turn, Toll Brothers has raised most components of its financial outlook for the fiscal year 2024 and increased its share buyback expectations from $500 million to $600 million.
Further details are expected to be shared in the company's conference call tomorrow at 8:30 a.m. ET. The call will likely provide additional insights into Toll Brothers' financial strategies and market outlook.
In other recent news, Toll Brothers Inc. reported impressive third-quarter results, surpassing analyst estimates. The luxury homebuilder reported earnings per share of $3.60, notably higher than the projected $3.31. The company's revenue was $2.73 billion, a slight increase from the anticipated $2.71 billion, marking a 2% YoY growth.
The company also experienced an 11% increase in home deliveries compared to last year's period, totaling 2,814 homes. Despite the average price of homes delivered being down from last year, net signed contracts saw an 11% rise in both units and dollar value relative to last year's third quarter.
However, the company ended the quarter with a backlog of 6,769 homes, valued at $7.07 billion, a decrease of 7% and 10% from a year ago.
CEO Douglas C. Yearley, Jr. expressed satisfaction with the strong results, highlighting a significant exceedance of guidance in the adjusted gross margin due to a favorable mix and greater efficiencies. Based on this robust performance, Toll Brothers has revised its full-year guidance upwards.
The company anticipates an adjusted gross margin of approximately 28.3% for fiscal 2024. Additionally, the company repurchased $246 million of common stock in the quarter and plans to increase its expected share repurchases for fiscal 2024 from $500 million to $600 million.
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