After exceeding top and bottom line expectations for its fiscal third quarter on Wednesday, the incredible rally in Toll Brothers TOL stock could continue.
Soaring over +80% year to date, Toll Brothers stock has impressively outperformed the broader market and many of its home builder peers including KB Home KBH and Lennar Corporation LEN which have soared more than +50% respectively.
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Toll Brothers Q3 Results
Delivering 2,814 homes at an average price of $968,000, Toll Brothers posted a quarterly record for Q3 sales at $2.72 billion compared to $2.68 billion in the comparative quarter. This also topped estimates of $2.69 billion by 1%.
Q3 EPS of $3.60 was down from earnings of $3.73 per share a year ago but exceeded expectations of $3.28 a share by 10%. Notably, Toll Brothers has surpassed earnings expectations in three of its last four quarterly reports posting an average EPS surprise of 7.76%.
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Revenue Guidance & Growth Trajectory
Toll Brothers now projects revenue between $10.4 billion- $10.5 billion for the full year or over $200 million of additional revenue compared to the midpoint of its previous guidance. This came in slightly short of Zacks estimates of $10.52 billion or 5% growth.
Based on Zacks estimates, Toll Brothers' top line is expected to increase another 4% in fiscal 2025 to $10.98 billion.
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Furthermore, Toll Brothers' annual earnings are now expected to rise 14% in FY24 to $14.11 per share versus EPS of $12.36 last year. Fiscal 2025 EPS is expected to dip -1% but projections of $13.91 per share would still represent 109% growth over the last five years with earnings at $6.63 a share in 2021.
Image Source: Zacks Investment Research
Valuation Comparison
Making Toll Brothers' favorable outlook more attractive is its valuation. Despite a monstrous YTD rally, Toll Brothers stock still trades at just 10X forward earnings and a steep discount to the S&P 500’’s 23.7X. This is also beneath its Zacks Building Products-Home Builders Industry average of 11.8X forward earnings with KB Home at 9.8X and Lennar at 12.6X.
Image Source: Zacks Investment Research
Bottom Line
Following its Q3 report, Toll Brothers stock sports a Zacks Rank #2 (Buy). After exceeding its quarterly expectations, earnings estimate revisions are likely to trend higher for this homebuilder which should extend the very impressive rally in TOL.
After exceeding top and bottom line expectations for its fiscal third quarter on Wednesday, the incredible rally in Toll Brothers TOL stock could continue.
Soaring over +80% year to date, Toll Brothers stock has impressively outperformed the broader market and many of its home builder peers including KB Home KBH and Lennar Corporation LEN which have soared more than +50% respectively.
Image Source: Zacks Investment Research
Toll Brothers Q3 Results
Delivering 2,814 homes at an average price of $968,000, Toll Brothers posted a quarterly record for Q3 sales at $2.72 billion compared to $2.68 billion in the comparative quarter. This also topped estimates of $2.69 billion by 1%.
Q3 EPS of $3.60 was down from earnings of $3.73 per share a year ago but exceeded expectations of $3.28 a share by 10%. Notably, Toll Brothers has surpassed earnings expectations in three of its last four quarterly reports posting an average EPS surprise of 7.76%.
Image Source: Zacks Investment Research
Revenue Guidance & Growth Trajectory
Toll Brothers now projects revenue between $10.4 billion- $10.5 billion for the full year or over $200 million of additional revenue compared to the midpoint of its previous guidance. This came in slightly short of Zacks estimates of $10.52 billion or 5% growth.
Based on Zacks estimates, Toll Brothers' top line is expected to increase another 4% in fiscal 2025 to $10.98 billion.
Image Source: Zacks Investment Research
Furthermore, Toll Brothers' annual earnings are now expected to rise 14% in FY24 to $14.11 per share versus EPS of $12.36 last year. Fiscal 2025 EPS is expected to dip -1% but projections of $13.91 per share would still represent 109% growth over the last five years with earnings at $6.63 a share in 2021.
Image Source: Zacks Investment Research
Valuation Comparison
Making Toll Brothers' favorable outlook more attractive is its valuation. Despite a monstrous YTD rally, Toll Brothers stock still trades at just 10X forward earnings and a steep discount to the S&P 500’’s 23.7X. This is also beneath its Zacks Building Products-Home Builders Industry average of 11.8X forward earnings with KB Home at 9.8X and Lennar at 12.6X.
Image Source: Zacks Investment Research
Bottom Line
Following its Q3 report, Toll Brothers stock sports a Zacks Rank #2 (Buy). After exceeding its quarterly expectations, earnings estimate revisions are likely to trend higher for this homebuilder which should extend the very impressive rally in TOL.
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