Earnings season is in full swing, with huge numbers of companies having already given their latest numbers to investors, and Toll Brothers is about to release its quarterly earnings report. The key to making smart investment decisions with stocks releasing their quarterly reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.
Homebuilders have been on fire over the past year, and Toll Brothers is a leader in the industry with its high-end focus. Let's take an early look at what's been happening with Toll Brothers over the past quarter and what we're likely to see in its quarterly report on Wednesday.
Stats on Toll Brothers
Analyst EPS Estimate
Change From Year-Ago Revenue
Earnings Beats in Past 4 Quarters
Source: Yahoo! Finance.
Will Toll Brothers build success for shareholders this quarter?
Contrary to investor sentiment, analysts have been fairly pessimistic on Toll's prospects in recent months. They've reduced consensus earnings-per-share estimates for the quarter by $0.06 and cut $0.20 off their full-year 2013 forecast. Yet the shares are up nearly 25% just since mid-November, adding to substantial gains from earlier in 2012.
Last quarter, Toll reported strong results, with big sales and income gains as orders improved and cancellation rates fell. The biggest concern many had was over the fiscal cliff, and with that issue resolved without any damage to the key mortgage-interest deduction, Toll's high-end clientele emerged relatively unscathed from modest tax increases.
Housing skeptics argue that homebuilder stocks have come too far, too fast, especially with smaller players Hovnanian and PulteGroup having more than doubled in the past year. Yet with residential investment at barely half of long-term average levels as a share of GDP growth, the contrarian argument is that homebuilders have plenty of room to run higher, and Toll's reputation for quality gives it a competitive advantage against its competitors.
In Toll's report, be sure to watch for signs that Toll may be thinking about raising capital to further expansion plans. KB Home did a common-stock and convertible-note offering earlier this month, raising more than $330 million without putting any downward pressure on the stock. If Toll needs capital, then now's the time to get it.
How to bet big on a recovery
Housing isn't the only area that's bouncing back from a long decline. Learn more about a few ETFs that have great promise for delivering profits to shareholders in a recovering global economy. You'll find them right here in the The Motley Fool's special free report, "3 ETFs Set to Soar During the Recovery." Don't wait; get access now by clicking here.
Click here to add Toll Brothers to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.
The article Toll Brothers Earnings: An Early Look originally appeared on Fool.com.
Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter: @DanCaplinger. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.