Toll Brothers Earnings Preview

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Investors are bracing for the worst and waiting to see if Toll Brothers (NYS: TOL) will fall short of Wall Street forecasts for the third consecutive quarter. The company will unveil its latest earnings on Tuesday, Dec. 6. Toll Brothers designs, builds, markets, and arranges financing for single-family detached and attached homes in luxury residential communities.

What analysts say:

  • Buy, sell, or hold?: Analysts think investors should stand pat on Toll Brothers with nine of 15 analysts rating it hold. Analysts don't like Toll Brothers as much as competitor Lennar overall. Out of 16 analysts, 12 rate Lennar a buy compared to six of 15 for Toll Brothers. While analysts still rate the stock a hold, they are a little more optimistic about it compared to three months ago.
  • Revenue forecasts: On average, analysts predict $424 million in revenue this quarter. That would represent a rise of 5.3% from the year-ago quarter.
  • Wall Street earnings expectations: The average analyst estimate is earnings of $0.05 per share. Estimates range from a loss of $0.02 to a profit of $0.10.

What our community says:
Most CAPS All-Stars are skeptical of TOL prospects, with 60.7% awarding it an "underperform" rating. The community is divided on the stock with 48.3% Fools assigning it an "outperform" rating and 51.7% an "underperform" rating. Fools are skeptical of Toll Brothers and haven't been shy with their opinions lately, logging 750 posts in the past 30 days. Toll Brothers' CAPS rating of two out of five stars is even gloomier than the community sentiment.

Management:
Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters. 

QuarterQ3Q2Q1Q4
Gross Margin13.8%13.6%15.6%8.8%
Operating Margin(2.6%)(7.5%)(3.1%)(9.4%)
Net Margin10.7%(6.5%)1.0%12.5%

One final thing: If you want to keep tabs on Toll Brothers movements, and for more analysis on the company, make sure you add it to your Watchlist.

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Earnings estimates provided by Zacks.

At the time this article was published

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