Toll Brothers Falls After Homebuilder Reports Sales Miss

(Bloomberg) -- Toll Brothers Inc. reported quarterly sales and profit that missed estimates, sending the homebuilder’s shares lower in late trading.

• Earnings per share amounted to 41 cents, while the average analyst estimate was 45 cents. The company’s revenue from home sales was $1.3 billion, missing the $1.45 billion estimate.

Key Insights

• The company’s focus on expensive homes puts it at a disadvantage to competitors that offer affordability. Still, sales in all price ranges are rebounding as a result of mortgage rates that have tumbled to near-record lows.
• Toll’s push to drive sales by offering incentives pressured profit margins. The adjusted home sales gross margin was 20.9% in the quarter, lower than the company’s own guidance of 21.25% issued in December. Toll had said that would be the low point of its fiscal year.
• The market has improved since the contracts for those sales were signed. Purchase agreements in the current quarter jumped 31% from a year earlier to 1,806, beating estimates.

Market Reaction

• The shares slipped as much 9.5% to $40.10 in late trading in New York. Stocks have been hammered the past two days on fears about the coronavirus.

Get More

• Click here to read Toll’s earnings statement.
• The company will hold a conference call Wednesday at 11 a.m. New York time.

--With assistance from Brian K. Sullivan.

To contact the reporter on this story: Prashant Gopal in Boston at pgopal2@bloomberg.net

To contact the editors responsible for this story: Craig Giammona at cgiammona@bloomberg.net, Christine Maurus

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