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Toll Brothers (TOL) to Report Q4 Earnings: What's in Store?
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Toll Brothers Inc. (TOL - Free Report) is scheduled to report fourth-quarter fiscal 2020 results on Dec 7, after the closing bell.
In the last reported quarter, the company’s earnings and revenues beat the Zacks Consensus Estimate by 30.4% and 6.8%, respectively. However, earnings and revenues of this homebuilding company dropped 10% and 6.5%, respectively, from the year-ago levels.
Markedly, Toll Brothers reported better-than-expected earnings in three of the last four quarters, the average surprise being 13.4%.
Trend in Estimate Revision
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings has slipped 0.8% to $1.23 per share over the past 30 days. This indicates a 12.8% drop from the year-ago earnings of $1.41 per share. The consensus mark for revenues is $2.05 billion, suggesting a 13.6% year-over-year decline.
This luxury homebuilding company is expected to have witnessed a decline in year-over-year earnings in the final quarter of fiscal 2020 due to lower revenues and margins. A combination of delayed deliveries and unfavorable mix has been impacting its performance. Nonetheless, Toll Brothers expects fiscal fourth deliveries and average price per unit to increase from fiscal third-quarter levels as strength in signed contracts continued into August, buoyed by low interest rates and continued undersupply of homes.
During fiscal third-quarter earnings call, Toll Brothers highlighted that it expects home deliveries for the quarter in the range of 2,400-2,550 units at an average selling price or ASP of $815,000-$835,000 (suggesting a decrease from the year-ago figure of $857,800). Home deliveries in the year-ago period were 2,672 units.
Toll Brothers expects adjusted home sales gross margin of 21.5%, implying a decline from 21.9% recorded in the year-ago period. SG&A expenses, as a percentage of home sales revenues, are projected at 9% (indicating no change from the year-ago period).
Gross margin-related woes are expected to get reflected in its fiscal fourth-quarter results. Modest pricing to combat affordability woes of homebuyers as well as rising lumber cost 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 revenue-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 does not conclusively predict an earnings beat for Toll Brothers this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is not the case here, as you will see below.
Earnings ESP: Toll Brothers has an Earnings ESP of -4.62%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
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Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
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Toll Brothers (TOL) to Report Q4 Earnings: What's in Store?
Toll Brothers Inc. (TOL - Free Report) is scheduled to report fourth-quarter fiscal 2020 results on Dec 7, after the closing bell.
In the last reported quarter, the company’s earnings and revenues beat the Zacks Consensus Estimate by 30.4% and 6.8%, respectively. However, earnings and revenues of this homebuilding company dropped 10% and 6.5%, respectively, from the year-ago levels.
Markedly, Toll Brothers reported better-than-expected earnings in three of the last four quarters, the average surprise being 13.4%.
Trend in Estimate Revision
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings has slipped 0.8% to $1.23 per share over the past 30 days. This indicates a 12.8% drop from the year-ago earnings of $1.41 per share. The consensus mark for revenues is $2.05 billion, suggesting a 13.6% 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 in the final quarter of fiscal 2020 due to lower revenues and margins. A combination of delayed deliveries and unfavorable mix has been impacting its performance. Nonetheless, Toll Brothers expects fiscal fourth deliveries and average price per unit to increase from fiscal third-quarter levels as strength in signed contracts continued into August, buoyed by low interest rates and continued undersupply of homes.
During fiscal third-quarter earnings call, Toll Brothers highlighted that it expects home deliveries for the quarter in the range of 2,400-2,550 units at an average selling price or ASP of $815,000-$835,000 (suggesting a decrease from the year-ago figure of $857,800). Home deliveries in the year-ago period were 2,672 units.
Toll Brothers expects adjusted home sales gross margin of 21.5%, implying a decline from 21.9% recorded in the year-ago period. SG&A expenses, as a percentage of home sales revenues, are projected at 9% (indicating no change from the year-ago period).
Gross margin-related woes are expected to get reflected in its fiscal fourth-quarter results. Modest pricing to combat affordability woes of homebuyers as well as rising lumber cost 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 revenue-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 does not conclusively predict an earnings beat for Toll Brothers this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is not the case here, as you will see below.
Earnings ESP: Toll Brothers has an Earnings ESP of -4.62%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Toll Brothers — which shares its space with Lennar (LEN - Free Report) , D.R. Horton (DHI - Free Report) and PulteGroup (PHM - Free Report) in the Zacks Building Products - Home Builders industry — currently carries a Zacks Rank #1.
You can see the complete list of today’s Zacks #1 Rank stocks here.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>