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Time to Buy Toll Brothers (TOL) Stock After Earnings
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After exceeding top and bottom line expectations for its fiscal third quarter on Wednesday, the incredible rally in Toll Brothers (TOL - Free Report) 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 - Free Report) and Lennar Corporation (LEN - Free Report) 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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After exceeding top and bottom line expectations for its fiscal third quarter on Wednesday, the incredible rally in Toll Brothers (TOL - Free Report) 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 - Free Report) and Lennar Corporation (LEN - Free Report) 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.