Core Insights - Toll Brothers, Inc. is launching three new luxury home collections in the Eldorado neighborhood of Santa Rita Ranch, Liberty Hill, Texas, with sales starting in fall 2025 [1][5] Group 1: Home Collections - The Maravilla Collection features homes ranging from 2,238 to 3,116 square feet on 50-foot-wide sites, with starting prices from the low $600,000s [2] - The Sierra Collection offers homes from 2,857 to 3,899 square feet on 60-foot-wide sites, starting from the low $700,000s [2] - The Tesoro Collection includes homes ranging from 3,292 to 4,700 square feet on 70-foot-wide sites, with starting prices anticipated from the low $800,000s [2] Group 2: Customer Experience - Toll Brothers provides a one-stop shopping experience at the Toll Brothers Design Studio, allowing customers to personalize their homes with professional design consultants [3] Group 3: Community Amenities - Santa Rita Ranch features luxury amenities such as six resort-style pools, water slides, splash pads, playgrounds, pickleball courts, a fitness center, and extensive parks and nature trails [5] - The community has received multiple awards, including Best of the Best Amenities in the Austin Area and Community of the Year awards from various organizations [5] Group 4: Company Overview - Toll Brothers, Inc. is a Fortune 500 Company and the leading builder of luxury homes in the United States, operating in over 60 markets across 24 states [8] - The company has been recognized as one of Fortune magazine's World's Most Admired Companies for over 10 years and has received multiple accolades for its leadership and performance in the industry [9]

Core Insights - Toll Brothers, Inc. has opened new model homes at Willow Glen in Forsyth County, Georgia, featuring luxury single-family homes with access to high-end amenities [1][4] - The community offers two-story homes with 5 bedrooms and 3.5 to 5.5 bathrooms, ranging from 3,297 to over 4,674 square feet, priced from the upper $700,000s [4][6] - The Toll Brothers Design Studio provides a personalized shopping experience for homebuyers, allowing them to customize their homes with professional design consultants [5] Company Overview - Toll Brothers is a leading builder of luxury homes in the United States, founded in 1967 and publicly traded since 1986 [8] - The company operates in over 60 markets across 24 states and the District of Columbia, offering a variety of housing options for different buyer segments [8] - Toll Brothers has received multiple accolades, including being named one of Fortune magazine's World's Most Admired Companies for over 10 years [9]

Core Viewpoint - Toll Brothers is considered a strong buy-and-hold stock due to its operational quality, cash flow, capital return, and long-term supply-demand outlook, but faces risks in 2025 due to macroeconomic conditions impacting the housing market [1] Group 1: Financial Performance - The company reported a strong FQ3 with robust profitability and ample capital returns, but guidance for deliveries fell short, indicating potential changes in Q4 and early Q1 [2][7] - The capital return is deemed safe in 2025, with cash flow sufficient to cover dividend payments while maintaining financial health, despite increased liabilities [9] - The annual dividend is $1.00, with a dividend yield of 0.76% and a payout ratio of 7.42% [9] Group 2: Market Conditions - The market reaction suggests it may be peaking, with stock price declining nearly 3.0% in pre-opening trading, indicating resistance at critical levels around the low-$130s [2] - Leading indicators show weakness, including a 4% decline in signed contracts, a 10% decline in backlog, and a 19% contraction in backlog value [8] - The Federal Open Market Committee (FOMC) is unlikely to make aggressive interest rate cuts to spur housing demand, with only an 82% chance for a 25-basis point cut at the September meeting [5][7] Group 3: Stock Performance and Analyst Sentiment - Analysts maintain a Moderate Buy rating with a 65% bullish bias, but price target uptrend has stalled, suggesting potential downward pressure on stock action [11] - Stock repurchases reduced the count by an average of 4.6% for the quarter, although the pace may slow in the future [10] - Toll Brothers was not included in a list of top stocks recommended by leading analysts, indicating a preference for other investment opportunities [12]

Core Insights - Toll Brothers, Inc. reported strong third-quarter fiscal 2025 results, with adjusted earnings and total revenues exceeding the Zacks Consensus Estimate, showing year-over-year growth in both metrics [1][3] Financial Performance - Adjusted earnings per share (EPS) for the quarter were $3.73, surpassing the Zacks Consensus Estimate of $3.59 by 3.9% and reflecting a 3.6% increase from the previous year [3][9] - Total revenues reached $2,945.1 million, beating the consensus mark of $2,852 million, and increased by 8% year-over-year [3][4] Home Sales and Deliveries - Total home sales revenues rose by 6% year-over-year to $2.9 billion, while home deliveries increased by 5% to 2,959 units [4] - The average selling price (ASP) of homes delivered was $973,600, up 0.5% from $968,200 in the prior year [4] Contracts and Backlog - Net-signed contracts decreased to 2,388 units from 2,490 units year-over-year, with a constant value of $2.4 billion [5] - The backlog at the end of the quarter was 5,492 homes, down 19% year-over-year, with potential revenues from the backlog declining 10% to $6.38 billion [6] Margins and Expenses - Adjusted home sales gross margin contracted to 27.5%, a decrease of 130 basis points year-over-year [7][9] - Selling, general and administrative (SG&A) expenses as a percentage of home sales revenues were 8.8%, down 20 basis points from the previous year [7] Balance Sheet and Cash Flow - Cash and cash equivalents stood at $852.3 million, down from $1.3 billion at the end of fiscal 2024, while the debt-to-capital ratio improved to 26.7% [8] - The company had $2.19 billion available under its revolving credit facility, maturing in February 2030 [8] Guidance - For Q4, Toll Brothers expects home deliveries of 3,350 units at an average price of $970,000-$980,000, with an adjusted home sales gross margin projected at 27% [11] - For fiscal 2025, home deliveries are anticipated to be around 11,200 units, with an average price of delivered homes expected to be $950,000-$960,000 [12]

Financial Data and Key Metrics Changes - The company delivered 2,959 homes at an average price of $974,000, generating record third-quarter home sale revenues of $2,900,000,000, which represents a 5% increase in units and a 6% increase in dollars compared to the previous year's third quarter [6][14]. - Adjusted gross margin for the quarter was 27.5%, exceeding guidance by 25 basis points, while SG&A expenses were 8.8% of home sales revenues, 40 basis points better than guidance [6][16]. - Earnings for the quarter were $370,000,000, or $3.73 per diluted share, with a return of approximately $226,000,000 to stockholders through dividends and share repurchases [6][19]. Business Line Data and Key Metrics Changes - The company signed 2,388 net contracts for $2,400,000,000, reflecting a 4% decline in units but flat in dollars due to an increase in average sales price to just over $1,000,000 [6][15]. - The average price of contracts signed in the quarter was $1,010,000, while the average price in the backlog was $1,160,000, indicating strong financial profiles of buyers [16][9]. - The cancellation rate was 3.2% of the beginning backlog, compared to 2.4% in the previous year's third quarter, reflecting the financial strength of buyers [10]. Market Data and Key Metrics Changes - The company ended the third quarter with 420 active selling communities and expects to reach 440 to 450 communities by the end of the fiscal year, representing 8% to 10% year-over-year growth [11][12]. - The company has 3,200 spec homes at various stages of construction and another 1,800 building permits ready to go, allowing for quick ramp-up in production as market conditions improve [8][9]. Company Strategy and Development Direction - The company continues to prioritize price and margin over pace, actively managing spec starts and inventory levels on a community-by-community basis to match local market conditions [7][11]. - The strategy of selling spec homes at various stages of construction allows buyers to personalize their homes while providing a faster construction schedule [8][9]. - The company remains focused on capital-efficient deal structures and maintaining a strong land position to support long-term growth [12][19]. Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining a full-year adjusted gross margin of 27.25% and expects to deliver approximately 11,200 homes for the full year [21][22]. - The management noted that building costs are beginning to come down modestly, with no significant impact from tariffs expected this fiscal year [10][11]. - There is optimism regarding community count growth and sales pace for fiscal year 2026, with expectations of 20 to 30 openings in Q4 [34][39]. Other Important Information - The company issued $500,000,000 of ten-year senior notes at a 5.6% coupon and called $350,000,000 of senior notes scheduled to mature in November, extending the weighted average years to maturity of senior notes [19]. - The company spent $433,000,000 on new land acquisitions during the quarter, maintaining a disciplined approach to underwriting [12][19]. Q&A Session Summary Question: Cash flow from operations guidance - The company expects to generate over $1,000,000,000 in cash flow from operations, with year-to-date cash flow around $400 million [27][28]. Question: Sales pace and incentives - Sales pace improved from May to August, with incentives increasing from 7% to 8% primarily due to discounting on finished spec homes [48][49]. Question: Order picture for Q4 - Management is optimistic about community count growth in Q4, with new openings expected to drive orders [60][61]. Question: Development costs and cycle times - The company has not seen much relief on land development costs, and cycle times vary across communities, with efforts ongoing to improve efficiency [68][77]. Question: Spec mix and margin differentials - The current spec mix is around 50%, compared to 10-15% pre-COVID, with margins on build-to-order homes being higher than spec homes [88][89].

Financial Data and Key Metrics Changes - The company delivered 2,959 homes at an average price of $974,000, generating record third-quarter home sale revenues of $2,900,000,000, which represents a 5% increase in units and a 6% increase in dollars compared to the previous year [5][15] - Adjusted gross margin was 27.5%, exceeding guidance by 25 basis points, while SG&A expense was 8.8% of home sales revenues, 40 basis points better than guidance [5][16] - Third-quarter earnings were $370,000,000 or $3.73 per diluted share, with a cancellation rate of 3.2%, which remains the lowest in the industry [10][15] Business Line Data and Key Metrics Changes - The company signed 2,388 net contracts for $2,400,000,000, with units down approximately 4% year over year, but dollars flat due to an increase in average sales price to just over $1,000,000 [5][15] - The average sales price (ASP) was up 4.5% versus 2024 and up 3% versus the last quarter, indicating resilience in the luxury business [5][15] - The backlog stood at 5,492 homes valued at $6,376,000,000, with an average sales price in the backlog of $1,160,000 [9] Market Data and Key Metrics Changes - The company ended the third quarter with 420 active selling communities and expects to end the fiscal year with 440 to 450 communities, representing 8% to 10% year-over-year growth [11][12] - The company has 3,200 spec homes at various stages of completion and another 1,800 building permits ready to go, allowing for quick ramp-up of spec production as market conditions improve [7][9] Company Strategy and Development Direction - The company continues to prioritize price and margin over pace, actively managing spec starts and inventory levels on a community-by-community basis to match local market conditions [6][11] - The strategy of selling spec homes at various stages of construction allows buyers to personalize their homes while providing a faster construction schedule [8][9] - The company remains disciplined in its land acquisition strategy, focusing on high-quality land at attractive returns while keeping land off balance sheet as long as practical [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining a full-year adjusted gross margin of 27.25% and expects to deliver approximately 11,200 homes for the full year [6][23] - The company anticipates a modest decline in build costs and has not seen significant impacts from tariffs, with expectations for build costs to come down in the foreseeable future [10][11] - Management highlighted the importance of community openings and spec strategy to drive growth in fiscal year 2026, with optimism about market conditions improving [36][41] Other Important Information - The company returned approximately $226,000,000 to stockholders through dividends and share repurchases in the quarter [5] - The company issued $500,000,000 of ten-year senior notes at a 5.6% coupon and called $350,000,000 of senior notes scheduled to mature in November [20][21] Q&A Session Summary Question: Cash flow from operations guidance - The year-to-date cash flow from operations is approximately $400 million, with expectations to reach over $1,000,000,000 by year-end [29][30] Question: Construction costs expectations - Management expects construction costs to be flat to modestly down in the short term, with some progress in negotiating better pricing for materials [31][32] Question: Sales pace and community growth - Management confirmed no change in the sales pace target of two homes per community per month and expressed excitement about community count growth in fiscal year 2026 [35][36] Question: Incentives and sales trends - Incentives increased to 8% due to more discounting on finished specs, but management noted that incentives have stabilized recently [50][51] Question: Development costs and community count guidance - Management has not seen much relief on land development costs but expects community count growth to be spread throughout the quarter without significant regional concentration [69][72]

Market Position and Strategy - Public homebuilders have increased their market share from 27% in 2012 to approximately 53% in 2024[15] - The company focuses on capital efficiency in land acquisition through optioned land, land banking, joint ventures, rolling takedowns, and seller financing[45] - The company is strategically focused on driving shareholder returns through land acquisition, improved operations, and buybacks & dividends[39] Financial Performance - The company's diluted earnings per share (EPS) has grown at a compound annual growth rate (CAGR) of 28%, reaching $1501 in FY 2024[54] - The company has repurchased approximately 52% of its shares since 2016, totaling 91 million shares at an average price of $50, and has paid approximately $644 million in dividends[63] - The company's revenue from home sales increased from $6937357000 in FY 2020 to $10563332000 in FY 2024[66] - The company's return on beginning equity was 231% in FY 2024[66] Industry Trends - The new home premium has compressed from a historical 17% to 3% in 2025, making the value proposition of a new home compelling compared to a used home[23] - The median age of owner-occupied U S homes is over 40 years, compared to 32 years in 2005[27] - Housing starts have not kept pace with household growth, indicating an undersupplied market[20] Land and Operations - The company operates in 24 states and over 60 markets[33] - The company's total addressable market (TAM) consists of approximately 575000 housing transactions with buyers having income greater than $200K[73]

Shares of Toll Brothers (NYSE: TOL ) have essentially tread water this year, missing out on a meaningful market rally. While still well below their 52-week high, the stock has rebounded more than 30% from its lows, and its focus on the higher-end of the housingOver fifteen years of experience making contrarian bets based on my macro view and stock-specific turnaround stories to garner outsized returns with a favorable risk/reward profile. If you want me to cover a specific stock or have a question for an ar ...

Group 1: Earnings Performance - Toll Brothers reported quarterly earnings of $3.73 per share, exceeding the Zacks Consensus Estimate of $3.59 per share, and up from $3.6 per share a year ago, representing an earnings surprise of +3.90% [1] - The company posted revenues of $2.95 billion for the quarter ended July 2025, surpassing the Zacks Consensus Estimate by 3.25%, compared to revenues of $2.73 billion in the same quarter last year [2] - Over the last four quarters, Toll Brothers has surpassed consensus EPS estimates three times and topped consensus revenue estimates three times as well [2] Group 2: Stock Performance and Outlook - Toll Brothers shares have increased by approximately 4.2% since the beginning of the year, while the S&P 500 has gained 9.7% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the upcoming quarter is $5.24 on revenues of $3.48 billion, and for the current fiscal year, it is $13.95 on revenues of $10.93 billion [7] Group 3: Industry Context - The Building Products - Home Builders industry, to which Toll Brothers belongs, is currently ranked in the bottom 8% of over 250 Zacks industries, indicating potential challenges ahead [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact stock performance [5] - The Zacks Rank for Toll Brothers is currently 3 (Hold), suggesting that the shares are expected to perform in line with the market in the near future [6]

Market Overview - The Nasdaq experienced a significant drop, shedding -314 points (-1.46%), while the Dow and S&P 500 showed minor fluctuations, closing up +10 points (+0.02%) and down -37 points (-0.59%) respectively [1] - The decline in tech stocks has been a continuing trend, with Palantir (PLTR) falling -9.3% on the day and -16.5% over the past five sessions [2] Company Earnings - Toll Brothers (TOL) reported fiscal Q3 earnings of $3.73 per share, exceeding the Zacks consensus estimate of $3.59, with revenues of $2.88 billion, surpassing the projected $2.85 billion [3] - The company achieved its fourth earnings beat in the last five quarters, although gross margins remained steady at +27.5% [4] - Orders for Toll Brothers were down -4% compared to expectations of flat, and the average home sold was $974K, slightly below analyst expectations [4] Upcoming Earnings Reports - Anticipation is building for retail earnings reports from Target (TGT), TJX Stores (TJX), Lowe's (LOW), and Estee Lauder (EL), with expected year-over-year earnings changes of -18.7%, +5%, +3.2%, and -87.5% respectively [5] Federal Reserve Insights - The Federal Open Market Committee (FOMC) minutes will be released, highlighting that the Fed has maintained rates at 4.25-4.50% for the fifth consecutive meeting, with notable dissent from two voting members for the first time in over 30 years [6]