Toll Brothers surpasses Q3 estimates; orders drop

Homebuilder Toll Brothers’ (NYSE: TOL) third quarter 2019 bottom and top-line results exceeded analysts’ views. For the July quarter, Toll Brothers reported earnings of $1.00 per share on revenue of $1.77 billion. Analysts had projected the company to earn $0.82 per share on revenue of $1.7 billion. Toll Brothers stock, which ended up 1.37% at $36.91 today, was up about 3% immediately after the earnings announcement.

However, TOL stock lost its upward momentum and later turned to red in the extended trading hours as the company reported a decline in gross margin and orders. 

Net signed contracts in the third quarter decreased to $1.87 billion and 2,241 units from fiscal third quarter 2018 totals of $2.03 billion and 2,316 units. Backlog value at third-quarter end slipped 10% to $5.84 billion and units in backlog declined 4% to 6,839. Adjusted home sales gross margin decreased 120 basis points to 23.1%.

“In our third quarter, we had strong revenues, gross margin, and earnings. While our third quarter contracts were down modestly, we are off to a good start in our fourth quarter. Low mortgage rates, a limited supply of new and existing homes, and a strong employment picture are providing tailwinds,” said CEO Douglas Yearley, Jr.

Read: Home Depot beats Q2 earnings estimates but revenues miss mark

For fiscal 2019, Toll Brothers expects deliveries of between 7,800 and 8,100 units with an average price of between $860,000 and $880,000.

Toll Brothers stock has gained 12% so far this year and 6% in the past 12 months period.

Get access to timely and accurate verbatim transcripts that are published within hours of the event