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]

[Q3 FY2025 Earnings Overview](index=1&type=section&id=Toll%20Brothers%20Reports%20FY%202025%20Third%20Quarter%20Results) [Q3 FY2025 Financial Highlights](index=1&type=section&id=FY%202025's%20Third%20Quarter%20Financial%20Highlights) The company achieved record Q3 revenues of $2.9 billion, though net income slightly declined and backlog value fell 10% Q3 FY2025 vs Q3 FY2024 Key Metrics | Metric | Q3 FY2025 | Q3 FY2024 | Change | | :--- | :--- | :--- | :--- | | **Net Income** | $369.6 million | $374.6 million | -1.3% | | **Diluted EPS** | $3.73 | $3.60 | +3.6% | | **Home Sales Revenues** | $2.88 billion | $2.72 billion (approx.) | +6% | | **Homes Delivered** | 2,959 units | 2,814 units | +5% | | **Net Signed Contract Value** | $2.41 billion | $2.41 billion | Flat | | **Contracted Homes** | 2,388 units | 2,490 units | -4% | | **Quarter-End Backlog Value** | $6.38 billion | $7.07 billion | -10% | | **Adjusted Gross Margin** | 27.5% | 28.8% | -130 bps | | **SG&A as % of Revenue** | 8.8% | 9.0% | -20 bps | - The company repurchased approximately **1.8 million shares** for a total of **$201.4 million** during the quarter[7](index=7&type=chunk) [Management Commentary](index=1&type=section&id=Management%20Commentary) Management highlighted record Q3 revenues and strong margins, citing the resilience of its luxury business - Delivered 2,959 homes at an average price of $974,000, resulting in record Q3 home sales revenues of **$2.9 billion**, a **6% increase YoY**[4](index=4&type=chunk) - **Adjusted gross margin of 27.5%** and **SG&A margin of 8.8%** both beat company guidance[4](index=4&type=chunk) - The average sales price of new contracts rose **4.5% YoY to $1.0 million**, offsetting a 4% decline in contract units and keeping contract dollar value flat[5](index=5&type=chunk) - The company maintains a solid financial position with significant cash flow and liquidity, and controls sufficient land for community count growth over the next several years, allowing for selective land acquisition[6](index=6&type=chunk) [Financial Guidance for Q4 and Full Year FY2025](index=2&type=section&id=Fourth%20Quarter%20and%20FY%202025%20Financial%20Guidance) The company projects delivering 11,200 homes for the full year with an adjusted gross margin of 27.25% Q4 and Full Year FY2025 Guidance | Metric | Fourth Quarter Guidance | Full Fiscal Year Guidance | | :--- | :--- | :--- | | **Deliveries** | 3,350 units | 11,200 units | | **Avg. Delivered Price** | $970,000 - $980,000 | $950,000 - $960,000 | | **Adj. Gross Margin** | 27.00% | 27.25% | | **SG&A % of Revenue** | 8.3% | 9.4% - 9.5% | | **Period-End Community Count** | 440 - 450 | 440 - 450 | | **Tax Rate** | 25.5% | 25.1% | [Detailed Financial Results](index=2&type=section&id=Detailed%20Financial%20Results) [Q3 & YTD FY2025 Financial Performance](index=2&type=section&id=Q3%20%26%20YTD%20FY2025%20Financial%20Performance) Q3 home sales revenue grew 6%, while nine-month pre-tax income declined due to lower land sales income Financial Highlights for the three months ended July 31 | Metric | 2025 | 2024 | | :--- | :--- | :--- | | **Net Income** | $369.6M | $374.6M | | **Home Sales Revenues** | $2.88B | $2.72B | | **Net Signed Contracts** | $2.41B (2,388 units) | $2.41B (2,490 units) | | **Quarter-End Backlog** | $6.38B (5,492 units) | $7.07B (6,769 units) | | **Adjusted Gross Margin** | 27.5% | 28.8% | | **Cancellations as % of Beginning Backlog** | 3.2% | 2.4% | Financial Highlights for the nine months ended July 31 | Metric | 2025 | 2024 | | :--- | :--- | :--- | | **Net Income** | $899.8M | $1.10B | | **Home Sales Revenues** | $7.43B | $7.30B | | **Net Signed Contracts** | $7.32B | $7.41B | | **Adjusted Gross Margin** | 27.4% | 28.6% | | **Income from Operations** | $1.16B | $1.43B | [Financial Position and Liquidity](index=3&type=section&id=Financial%20Position%20and%20Liquidity) The company maintained strong liquidity, managed its capital structure, and increased book value per share to $83.85 - Ended Q3 with **$852.3 million in cash** and cash equivalents and **$2.19 billion available** under its revolving credit facility[13](index=13&type=chunk) - Issued **$500.0 million of 5.600% senior notes** due 2035 and redeemed **$350.0 million of 4.875% senior notes** due 2025[13](index=13&type=chunk) - **Book value per share increased to $83.85** at quarter-end, up from $76.87 at FYE 2024[13](index=13&type=chunk) - The **net debt-to-capital ratio was 19.3%** at the end of Q3 FY2025, compared to 19.8% at the end of Q2 FY2025 and 15.2% at FYE 2024[13](index=13&type=chunk) [Consolidated Financial Statements](index=7&type=section&id=Consolidated%20Financial%20Statements) Financial statements show increased assets from inventory and a decline in net income for Q3 and the nine-month period [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets grew to $14.40 billion, driven by a significant increase in inventory Balance Sheet Highlights (in millions) | Account | July 31, 2025 | October 31, 2024 | | :--- | :--- | :--- | | **Cash and cash equivalents** | $852.3 | $1,303.0 | | **Inventory** | $11,071.5 | $9,712.9 | | **Total Assets** | $14,396.8 | $13,367.9 | | **Total Liabilities** | $6,285.6 | $5,681.2 | | **Total Stockholders' Equity** | $8,095.6 | $7,670.9 | [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q3 revenue rose 6% while net income slightly fell; nine-month net income saw a more significant decline Statement of Operations Highlights (Q3, in millions) | Account | Q3 2025 | Q3 2024 | | :--- | :--- | :--- | | **Home Sales Revenue** | $2,881.0 | $2,724.5 | | **Gross Margin - Home Sales** | $738.2 (25.6%) | $747.3 (27.4%) | | **Income from Operations** | $487.7 | $497.2 | | **Net Income** | $369.6 | $374.6 | | **Diluted EPS** | $3.73 | $3.60 | Statement of Operations Highlights (Nine Months, in millions) | Account | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | | **Home Sales Revenue** | $7,428.2 | $7,303.3 | | **Gross Margin - Home Sales** | $1,901.7 (25.6%) | $1,963.7 (26.9%) | | **Income from Operations** | $1,156.5 | $1,429.1 | | **Net Income** | $899.8 | $1,095.8 | | **Diluted EPS** | $8.95 | $10.40 | [Supplemental and Segment Data](index=9&type=section&id=Supplemental%20and%20Segment%20Data) This section details inventory, impairments, and geographic segment performance, with the Pacific region showing the highest prices [Supplemental Financial Data](index=9&type=section&id=Supplemental%20Financial%20Data) Inventory grew to $11.07 billion, and inventory impairments increased significantly to $23.3 million in Q3 Home Sites Controlled | Type | July 31, 2025 | July 31, 2024 | | :--- | :--- | :--- | | **Owned** | 32,761 | 36,345 | | **Optioned** | 43,990 | 36,384 | | **Total** | 76,751 | 72,729 | - Inventory impairments and write-offs charged to home sales cost of revenues increased to **$23.3 million in Q3 2025**, compared to $5.5 million in Q3 2024[30](index=30&type=chunk) [Geographic Segment Performance](index=10&type=section&id=Geographic%20Segment%20Performance) The South segment led in revenue and deliveries, while the Pacific segment had the highest average contract price Q3 2025 Performance by Geographic Segment | Segment | Revenues ($M) | Contracts ($M) | Backlog ($M) | | :--- | :--- | :--- | :--- | | **North** | $438.7 | $431.3 | $1,021.2 | | **Mid-Atlantic** | $400.7 | $369.0 | $956.2 | | **South** | $757.9 | $524.2 | $1,543.3 | | **Mountain** | $730.2 | $575.6 | $1,410.8 | | **Pacific** | $553.1 | $511.9 | $1,444.7 | - The average price per unit in backlog at quarter-end was **$1,161,000**, a significant increase from $1,044,000 in the prior year, driven largely by a substantial price increase in the Pacific segment's backlog[31](index=31&type=chunk) [Reconciliation of Non-GAAP Measures](index=12&type=section&id=RECONCILIATION%20OF%20NON-GAAP%20MEASURES) This section reconciles non-GAAP measures like adjusted gross margin and net debt-to-capital ratio to their GAAP equivalents [Adjusted Home Sales Gross Margin](index=12&type=section&id=Adjusted%20Home%20Sales%20Gross%20Margin) The adjusted home sales gross margin of 27.5% excludes interest and inventory write-downs from the GAAP margin Adjusted Home Sales Gross Margin Reconciliation (Q3) | Metric | Q3 2025 | Q3 2024 | | :--- | :--- | :--- | | **Home Sales Gross Margin (GAAP)** | 25.6% | 27.4% | | Add: Interest | 1.1% (approx.) | 1.2% (approx.) | | Add: Inventory Impairments | 0.8% (approx.) | 0.2% (approx.) | | **Adjusted Home Sales Gross Margin (Non-GAAP)** | 27.5% | 28.8% | - Management believes this non-GAAP measure allows investors to evaluate the performance of home building operations without the often varying effects of capitalized interest costs and inventory impairments[41](index=41&type=chunk) [Net Debt-to-Capital Ratio](index=14&type=section&id=Net%20Debt-to-Capital%20Ratio) The net debt-to-capital ratio, an indicator of leverage, stood at 19.3% at the end of Q3 Net Debt-to-Capital Ratio Reconciliation | Metric | July 31, 2025 | April 30, 2025 | Oct 31, 2024 | | :--- | :--- | :--- | :--- | | **Debt-to-Capital Ratio (GAAP)** | 26.7% | 26.1% | 27.0% | | **Net Debt-to-Capital Ratio (Non-GAAP)** | 19.3% | 19.8% | 15.2% | - Management uses the net debt-to-capital ratio as an indicator of its overall leverage and believes it is a useful financial measure for investors to understand the leverage employed in the Company's operations[48](index=48&type=chunk) [Company Information and Disclosures](index=3&type=section&id=Company%20Information%20and%20Disclosures) [About Toll Brothers](index=4&type=section&id=About%20Toll%20Brothers) Toll Brothers is a leading U.S. luxury home builder operating in over 60 markets across 24 states - Toll Brothers is the nation's leading builder of luxury homes, serving various buyer segments including first-time, move-up, active-adult, and second-home buyers[16](index=16&type=chunk) - The company operates in **over 60 markets in 24 states** and the District of Columbia and has been recognized as one of Fortune magazine's World's Most Admired Companies for over 10 consecutive years[16](index=16&type=chunk)[17](index=17&type=chunk) [Forward-Looking Statements](index=5&type=section&id=Forward-Looking%20Statements) This section outlines risks and uncertainties that could cause future results to differ from forward-looking statements - The release contains forward-looking statements regarding future events and performance, which are not guarantees and are subject to risks and uncertainties[20](index=20&type=chunk)[21](index=21&type=chunk) - Major risks that could affect future results include general economic conditions, interest rates, market demand, land availability, competition, and the price of raw materials and labor[21](index=21&type=chunk)

Core Insights - Toll Brothers, Inc. reported strong financial results for the third quarter of FY 2025, with home sales revenues reaching $2.9 billion, a 6% increase compared to the same period in FY 2024 [3][6] - The company delivered 2,959 homes at an average price of $974,000, reflecting a resilient luxury market despite economic pressures [3][4] - The adjusted gross margin was 27.5%, slightly above guidance, while the SG&A margin improved to 8.8% [3][6] Financial Performance - Net income for the third quarter was $369.6 million, or $3.73 per diluted share, compared to $374.6 million, or $3.60 per diluted share in the same quarter last year [6][10] - Home sales revenues increased to $2.88 billion, up from $2.72 billion, with delivered homes rising by 5% [6][10] - The backlog value at the end of the quarter was $6.38 billion, down 10% year-over-year, with homes in backlog decreasing by 19% [6][10] Sales and Contracts - The company signed 2,388 net contracts valued at $2.4 billion, with an average sales price of $1.0 million, a 4.5% increase year-over-year [4][10] - Contracted homes decreased by 4% compared to the previous year, indicating challenges in unit sales despite stable contract dollar value [4][10] Guidance and Outlook - For the fourth quarter, Toll Brothers expects to deliver 3,350 units at an average price between $970,000 and $980,000, with an adjusted home sales gross margin of 27.00% [9] - The company maintains a solid financial position with significant cash flows and liquidity, controlling sufficient land for future growth [5][16] Shareholder Returns - The company returned $226 million to shareholders through share repurchases and dividends, indicating a commitment to shareholder value [3][6] - Approximately 1.8 million shares were repurchased at an average price of $112.40 per share [6][10]

Group 1: Housing Market Overview - The housing market is experiencing mixed signals, with privately owned housing starts for July at an adjusted annual rate of 1.428 million, exceeding analysts' estimates, while building permits fell by 2.8% from June, missing expectations [1] - Despite the mixed data, Lennar Corp and Toll Brothers Inc are seeing afternoon gains in their stock prices [1] Group 2: Lennar Corp (LEN) Analysis - Lennar's stock is trading 1.6% higher at $133.52, following a rally to its highest level since January, with a 22% increase over the past three months [2] - The stock has started consolidating above the 200-day moving average, a significant trendline it had been below since early December [2] - The Schaeffer's put/call open interest ratio for Lennar is 1.28, ranking in the 97th percentile of readings from the past year, indicating a potential unwinding of pessimism [3] Group 3: Toll Brothers Inc (TOL) Analysis - Toll Brothers' stock is up 0.6% to $132.17, with fiscal third-quarter results expected after market close [4] - BofA Global Research has raised Toll Brothers' price target to $145 from $132, reflecting positive sentiment [4] - The stock has a mixed history of post-earnings performance, having settled lower after three of its most recent quarterly reports, including an 8.5% drop in May 2024 [5] - Options markets are pricing in a larger next-day swing of 6.6%, compared to an average of 4.6% over the last two years [5]

Core Insights - Toll Brothers, Inc. is scheduled to report its third-quarter fiscal 2025 results on August 19, 2025, with a focus on maintaining strong margins and steady deliveries in a challenging housing market [1] Financial Performance - The company achieved a record fiscal second quarter with earnings per share of $3.50, exceeding estimates by 22.4% and showing a year-over-year increase of 3.6% [2] - Revenue for the second quarter was $2.74 billion, surpassing consensus by 9.5% and reflecting a 2.3% year-over-year growth [2] - Home deliveries totaled 2,899 units at an average price of $934,000, with a gross margin of 27.5% and SG&A expenses at 9.5% of sales, both exceeding guidance [2] - Despite a 13% decline in net signed contracts due to economic uncertainty, the backlog remains strong at $6.84 billion [2] Future Estimates - The Zacks Consensus Estimate for the fiscal third-quarter earnings per share is $3.59, indicating a slight decline from the previous year's EPS of $3.60 [4] - Revenue for the third quarter is estimated at $2.85 billion, suggesting a 4.6% year-over-year increase [4] - For fiscal 2025, revenues are expected to increase by 0.8%, while the bottom line is projected to decline by 7.1% [5] Guidance for Q3 2025 - Toll Brothers anticipates home deliveries between 2,800 and 3,000 units at an average selling price of $965,000 to $985,000 [7] - The company expects adjusted gross margin to be 27.25%, slightly below the previous year's margin of 28.8% [8] - SG&A expenses are projected to be 9.2% of home sales revenue, up from 9% in the same quarter last year [9] Market Position and Customer Base - The company serves a financially resilient customer base, with over 70% of its business targeting move-up and empty-nester segments [10] - More than 24% of buyers in the second quarter paid in cash, with an average loan-to-value ratio of 70% [10] - Toll Brothers operates in over 60 markets across 24 states, offering a diverse range of homes priced from $300,000 to over $5 million [11] Challenges and Risks - The company faces challenges such as declining consumer confidence, with net signed contracts down significantly year-over-year [12] - Increased incentives to support sales may pressure margins, with current incentives at about 7% of the average selling price [12] - The need to sell and close 1,900 spec homes in the second half of the year poses a risk to meeting delivery guidance [12] Stock Performance and Valuation - Toll Brothers stock has risen 23% over the past three months, outperforming some peers in the homebuilding industry [16] - The stock is currently trading at a discount to its industry in terms of forward price/earnings ratios [20] - The company holds a Zacks Rank of 3, indicating a hold recommendation, with limited near-term upside due to current earnings estimates [15][23]

Core Viewpoint - Toll Brothers is expected to demonstrate strength in the homebuilder sector with its upcoming third-quarter financial results, showing potential growth in revenue and earnings per share compared to the previous year [1][2]. Earnings Estimates - Analysts predict Toll Brothers will report third-quarter revenue of $2.85 billion, an increase from $2.73 billion in the same quarter last year [1]. - Expected earnings per share for the third quarter are $3.60, consistent with the earnings per share reported in the third quarter of the previous year [2]. Recent Performance - The company has consistently outperformed analyst estimates, beating expectations in nine of the last ten quarters overall [2]. - In the second quarter, Toll Brothers exceeded analyst estimates for earnings per share [2]. Market Context - The housing sector remains a focal point for investors, with new home sales declining recently [3]. - Anticipation of rate cuts later this year and pent-up demand for home purchases is expected to influence the market positively in the second half of the year or into 2026 [3]. Influential Investors - Warren Buffett's Berkshire Hathaway has made new investments in the homebuilder sector, which may positively impact the entire industry, even though Buffett did not directly invest in Toll Brothers [4][5]. - Berkshire Hathaway increased its stake in Lennar Corporation Class B shares by 19%, indicating confidence in the homebuilder sector [4]. Key Metrics to Watch - Investors and analysts will focus on key metrics such as home sales revenue, delivered homes, net signed contract value, and contracted homes in Toll Brothers' upcoming report [5]. Backlog Information - Toll Brothers reported a backlog value of $6.84 billion at the end of the second quarter, with 6,063 homes in backlog, reflecting a year-over-year decrease of 7% in value and 15% in the number of homes [6]. Stock Performance - Toll Brothers stock has increased by 0.8% to $131.59, with a year-to-date increase of 4.6% in 2025, and has a 52-week trading range of $86.67 to $169.52 [6].

Core Insights - Toll Brothers, Inc. announced the grand opening of seven model homes at The Station, a new luxury home community in Sunnyvale, California, featuring townhomes and condominiums near major tech employers [1][4] Group 1: Community Features - The Station offers two collections of luxury homes: Vantage at The Station and Terraces at The Station, with sizes ranging from 962 to over 2,387 square feet, accommodating up to 4 bedrooms and 3 baths [4] - Homes in The Station are priced from the upper $900,000s, indicating a premium market positioning [4] - The community includes amenities such as a clubhouse, children's playground, dog park, walking paths, and expansive lawns, enhancing the living experience [6] Group 2: Customer Experience - Toll Brothers provides a state-of-the-art Design Studio for customers to personalize their homes with a wide array of selections, supported by professional Design Consultants [5] - Move-in ready homes with Designer Appointed Features are available, allowing buyers to move in later this summer or fall [5] Group 3: Educational Opportunities - Residents have access to highly ranked local schools, including Ellis Elementary, Sunnyvale Middle School, and Fremont High School, as well as sought-after private schools [6] Group 4: Company Background - Toll Brothers is a Fortune 500 Company, recognized as the nation's leading builder of luxury homes, with operations in over 60 markets across 24 states [9] - The company has received multiple accolades, including being named one of Fortune magazine's World's Most Admired Companies for over 10 years [10]

Core Insights - Toll Brothers, Inc. is launching a new luxury home community named Breton Hill in Warwick Township, Pennsylvania, expected to open for sale in late 2025 [1][2][4] Company Overview - Toll Brothers is recognized as the nation's leading builder of luxury homes and is a Fortune 500 Company, founded in 1967 and publicly traded since 1986 [8][9] - 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] Community Details - Breton Hill will consist of only 13 single-family homes, with sizes ranging from 3,677 to over 5,210 square feet, featuring 4 to 6 bedrooms and 3.5 to 6.5 bathrooms [2][4] - Home sites will range from half an acre to one acre, with pricing anticipated to start at $1.6 million [2][4] - The community is located near shopping, dining, and major commuter routes, enhancing its appeal [6] Design and Personalization - The homes will feature modern, open-concept designs with options for personalization through the Toll Brothers Design Studio [2][5] - Customers will have access to a state-of-the-art Design Studio to select various home features with professional assistance [5] Market Position and Recognition - Toll Brothers has been recognized as one of Fortune magazine's World's Most Admired Companies for over 10 years and has received multiple awards for its excellence in home building [9]