Toll Brothers’ 24Q4 EPS was $4.63, up 12.6% from 23Q4’s $4.11. My estimate was $4.24. Consensus was $4.34. Deliveries of 3,431 units increased 24.5% YOY. The average sales price per unit fell 11.3% to $950,000, mostly on sales mix. Adjusted gross margin of 27.9% was 150 bp below 23Q4. The home SG&A expense ratio rose 10 bp to 8.3%. New orders increased 30.4% YOY to 2,658 units, 12.6% above my estimate. Ending backlog was down 5.1% in units and 3.2% in dollar value.
With the fourth quarter surge in deliveries and orders, fiscal 2024 was the strongest ever for Toll Brothers. That surge occurred despite a nearly 100 bp increase in mortgage rates during most of the quarter. Management attributes this strength to positive fundamentals, such as the trend toward buying a home later in life, when buyers are better off financially. For Toll, these trends are more than offsetting the affordability challenges caused by persistently high mortgage rates.
The company plans to continue to grow its operating footprint from 408 active communities as of fiscal 2024 year-end to between 440 and 450 communities by the end of fiscal 2025. For fiscal 2025, it anticipates 11,200-11,600 unit deliveries at an average price of $945,000-$965,000. That translates to home sale revenues of $10.6-$11.2 billion. It also anticipates an adjusted home sales gross margin of 27.25%, an SG&A expense ratio of 9.4%-9.5%, other income of $110 million and an effective tax rate of 25.5%.
Since Toll consistently beats consensus and its own guidance, I have set my projection variables at the high end of the guidance ranges. Accordingly, my fiscal 2025 projections show total revenues of $11.36 billion and GAAP EPS of $15.08, which are above the current consensus of $11.0 billion and $14.57, respectively.
Since my last report on Sept. 9, TOL’s stock is down 4.5%, less than its peer group’s 13.9% decline, but it has underperformed the S&P MidCap 400’s 9.9% advance. Since reaching a new all-time high of $169.52 on Nov. 25, the stock has fallen 20.9%, worse than peers’ 14.9% decline and the MidCap 400’s 4.5% decline. Despite the recent drop, TOL is up 29.1% YTD, better than the MidCap 400’s 16.4% gain and peers’ 5.6% gain. With the recent drop, the stock is struggling to hold at its 200-day moving average, a key technical support level. My coverage of Toll Brothers and its stock continues without a performance rating or price target.
This is a summary of my recent update report on Toll Brothers, Inc. (TOL). To obtain a copy of the report, please reach out to me using the contact information provided below.
January 10, 2025 (Report published on December 17, 2024.)
Stephen P. Percoco
Lark Research
839 Dewitt Street
Linden, New Jersey 07036
(908) 975-0250
admin@larkresearch.com
© 2015-2025 by Stephen P. Percoco, Lark Research. All rights reserved.
This blog post (as with all posts on this website) represents the opinion of Lark Research based upon its own independent research and supporting information obtained from various sources. Although Lark Research believes these sources to be reliable, it has not independently confirmed their accuracy. Consequently, this blog post may contain errors and omissions. Furthermore, this blog post is a summary of a recent report published on this subject and that report provides a more complete discussion and assessment of the risks and opportunities of any investment securities discussed herein. No representation or warranty is expressed or implied by the publication of this blog post. This blog post is for informational purposes only and shall not be construed as investment advice that meets the specific needs of any investor. Investors should, in consultation with their financial advisers, determine the suitability of the post’s recommendations, if any, to their own specific circumstances. Lark Research is not registered as an investment adviser with the Securities and Exchange Commission, pursuant to exemptions provided in the Investment Company Act of 1940. This blog post remains the property of Lark Research and may not be reproduced, copied or similarly disseminated, in whole or in part, without its prior written consent.
You must be logged in to post a comment.