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Toll Brothers (TOL) to Report Q3 Earnings: What's in Store?
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Toll Brothers Inc. (TOL - Free Report) is scheduled to report third-quarter fiscal 2020 (ended Jul 31, 2020) results on Aug 25, after the closing bell.
In the last reported quarter, the company’s earnings beat the Zacks Consensus Estimate by 22.9% but revenues missed the same by 0.8%. Earnings and revenues of this homebuilding company dropped 32.2% and 9.7%, respectively, from the year-ago reported figures.
Markedly, Toll Brothers reported better-than-expected earnings in three of the last four quarters, with the average surprise being 11.3%.
Trend in Estimate Revision
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings has increased 4.5% to 69 cents per share over the past 30 days. This indicates a 31% decrease from the year-ago earnings of $1.00 per share. The consensus mark for revenues is $1.55 billion, suggesting a 12.4% year-over-year decline.
This luxury homebuilding company is expected to have witnessed a decline in year-over-year earnings due to lower revenues and margins. A combination of delayed deliveries, unfavorable mix, and additional closeout costs related to certain older communities has been impacting its performance.
Additionally, during fiscal second-quarter earnings call, Toll Brothers highlighted that it expects some deliveries to remain challenged due to several weeks of lost or limited construction activity in certain markets that remained shut down in the second quarter and evolving construction practices. It also expects joint ventures, land sales and other income to be lower due to market conditions.
Meanwhile, gross margin-related woes are expected to get reflected in its fiscal third-quarter results. Modest pricing to combat affordability woes of homebuyers is expected to have weighed on margins.
Also, persistent pressure on SG&A expense is expected to have weighed on the bottom line in the quarter. In order to mitigate top line-related woes, the company has been making investments that comprise implementation of IT system upgrades. This has been resulting in increased SG&A, as a percentage of revenues.
What the Zacks Model Says
Our proven model predicts an earnings beat for Toll Brothers in the quarter to be reported. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the changes of an earnings beat. This is exactly the case here as you will see below.
Earnings ESP: Toll Brothers has an Earnings ESP of +5.57%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
D.R. Horton, Inc. (DHI - Free Report) — a Zacks Rank #1 stock — reported third-quarter fiscal 2020 results, wherein earnings and revenues handily beat the respective Zacks Consensus Estimate.
PulteGroup Inc. (PHM - Free Report) — a Zacks Rank #1 stock — reported second-quarter 2020 results, wherein earnings and revenues handily surpassed the Zacks Consensus Estimate, buoyed by a recovery in demand.
NVR, Inc. (NVR - Free Report) — also a Zacks Rank #2 stock — delivered a lackluster performance in second-quarter 2020, wherein both earnings and homebuilding revenues lagged the Zacks Consensus Estimate as well as declined year over year.
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It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
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Toll Brothers (TOL) to Report Q3 Earnings: What's in Store?
Toll Brothers Inc. (TOL - Free Report) is scheduled to report third-quarter fiscal 2020 (ended Jul 31, 2020) results on Aug 25, after the closing bell.
In the last reported quarter, the company’s earnings beat the Zacks Consensus Estimate by 22.9% but revenues missed the same by 0.8%. Earnings and revenues of this homebuilding company dropped 32.2% and 9.7%, respectively, from the year-ago reported figures.
Markedly, Toll Brothers reported better-than-expected earnings in three of the last four quarters, with the average surprise being 11.3%.
Trend in Estimate Revision
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings has increased 4.5% to 69 cents per share over the past 30 days. This indicates a 31% decrease from the year-ago earnings of $1.00 per share. The consensus mark for revenues is $1.55 billion, suggesting a 12.4% year-over-year decline.
Toll Brothers Inc. Price and EPS Surprise
Toll Brothers Inc. price-eps-surprise | Toll Brothers Inc. Quote
Factors to Consider
This luxury homebuilding company is expected to have witnessed a decline in year-over-year earnings due to lower revenues and margins. A combination of delayed deliveries, unfavorable mix, and additional closeout costs related to certain older communities has been impacting its performance.
Additionally, during fiscal second-quarter earnings call, Toll Brothers highlighted that it expects some deliveries to remain challenged due to several weeks of lost or limited construction activity in certain markets that remained shut down in the second quarter and evolving construction practices. It also expects joint ventures, land sales and other income to be lower due to market conditions.
Meanwhile, gross margin-related woes are expected to get reflected in its fiscal third-quarter results. Modest pricing to combat affordability woes of homebuyers is expected to have weighed on margins.
Also, persistent pressure on SG&A expense is expected to have weighed on the bottom line in the quarter. In order to mitigate top line-related woes, the company has been making investments that comprise implementation of IT system upgrades. This has been resulting in increased SG&A, as a percentage of revenues.
What the Zacks Model Says
Our proven model predicts an earnings beat for Toll Brothers in the quarter to be reported. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the changes of an earnings beat. This is exactly the case here as you will see below.
Earnings ESP: Toll Brothers has an Earnings ESP of +5.57%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: It currently carries a Zacks Rank #2.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Peer Releases
D.R. Horton, Inc. (DHI - Free Report) — a Zacks Rank #1 stock — reported third-quarter fiscal 2020 results, wherein earnings and revenues handily beat the respective Zacks Consensus Estimate.
PulteGroup Inc. (PHM - Free Report) — a Zacks Rank #1 stock — reported second-quarter 2020 results, wherein earnings and revenues handily surpassed the Zacks Consensus Estimate, buoyed by a recovery in demand.
NVR, Inc. (NVR - Free Report) — also a Zacks Rank #2 stock — delivered a lackluster performance in second-quarter 2020, wherein both earnings and homebuilding revenues lagged the Zacks Consensus Estimate as well as declined year over year.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2021.
Click here for the 6 trades >>