Here's What Investors Must Know Ahead of Toll Brothers' Q4 Earnings

Core Insights - Toll Brothers, Inc. (TOL) is set to report its fourth-quarter fiscal 2025 results on December 8, after market close. The company has shown a mixed performance in the past quarters, with adjusted earnings and total revenues exceeding estimates in three of the last four quarters, averaging a 5.5% beat [1]. Earnings & Revenue Expectations - The Zacks Consensus Estimate for TOL's fiscal fourth-quarter earnings per share (EPS) has decreased to $4.87, reflecting a 5.2% year-over-year growth. Total revenues are expected to be $3.32 billion, indicating a slight decline of 0.3% from $3.33 billion year-over-year [2]. Factors Influencing Q4 Performance - TOL's revenue performance is anticipated to decline year-over-year due to uncertainties in the U.S. housing market, with consumer confidence remaining low amid high mortgage rates and inflation. Demand has softened particularly in the South, Mountain, and Pacific regions [3]. Home Deliveries and Pricing - For the fiscal fourth quarter, TOL expects home deliveries to be approximately 3,350 units, a decline of 2.4% year-over-year. However, the luxury positioning and higher-income customer base may mitigate some market challenges. The average selling price (ASP) of delivered homes is projected to be between $970,000 and $980,000, up from $950,200 in the previous year, indicating a year-over-year increase of 2.5% [4][5]. Earnings & Margins - TOL's bottom line is expected to improve due to disciplined pricing and sales management, alongside cost control efforts. However, a shift towards lower-margin products in certain regions, particularly the Pacific, is likely to negatively impact the home sales gross margin, which is expected to be 27%, reflecting a 90-basis point contraction year-over-year [6][7]. Backlog - The total backlog for TOL is expected to be 4,935 units, down 17.7% year-over-year, with potential revenues declining by 9% to $5.89 billion [9]. Earnings Prediction Model - The current model does not predict an earnings beat for TOL, as it has an Earnings ESP of -2.84% and a Zacks Rank of 4 (Sell), indicating a lower likelihood of exceeding earnings expectations [10][11].