Toll Brothers Stock Rises After Beating Earnings Expectations

Toll Brothers, the prominent home builder, saw its stock rise in after-hours trading on Tuesday as it reported fourth-quarter and full-year earnings that exceeded analyst predictions. The company anticipates that lower inflation and mortgage rates will contribute to increased demand for new homes.

In the fourth quarter, Toll Brothers reported earnings of $4.11 per diluted share with revenue totaling approximately $3 billion. This resulted in fiscal-year earnings of $12.36 per diluted share, accompanied by approximately $10 billion in revenue. Analysts surveyed by FactSet had projected earnings of $3.72 per share on sales of around $2.8 billion for the quarter, as well as full-year earnings of $11.97 per share on approximately $9.7 billion in revenue.

Investors reacted positively to the news, causing shares to surge by 3% in after-hours trading.

Toll Brothers Chairman and CEO, Douglas C. Yearley, Jr., expressed optimism about the spring selling season following the recent decline in mortgage rates. He stated, "With resale inventories at historic lows, buyers continue to be drawn to new homes, and we expect lower rates with lower inflation to add to this already solid demand."

Yearley emphasized the effectiveness of Toll Brothers' strategy, which includes expanding their home offerings to encompass lower price points and increasing their supply of spec homes. Moreover, he highlighted the company's focus on growing their community count. Yearley believes that these measures have positioned Toll Brothers well in the current market.

During the quarter, Toll Brothers delivered 2,755 homes and contracted 2,038 homes. These figures contributed to a total of 9,597 deliveries and 8,077 homes under contract for the fiscal year of 2023. Looking ahead, the company anticipates continued growth in the new year, with projected delivered homes ranging from 9,850 to 10,350 in 2024. Additionally, Toll Brothers plans to increase its community count by approximately 10%, reaching 410 communities by the end of next year.

Yearley expressed confidence in the long-term outlook for the new home market, citing factors such as the aging housing supply, demographic changes, and the disparity between high demand and low supply. Toll Brothers will provide further insights and discuss its financial results in a conference call on Wednesday morning.