By Shaina Mishkin
Toll Brothers stock opened lower after the company reported mixed financial results and said it won't be clear until late January whether a "choppy" environment for home sales will improve.
Toll Brothers said late Monday it earned $4.58 a share on $3.4 billion in revenue in its fiscal fourth quarter, the three months through Oct. 31. Earnings were lower than the $4.88 consensus call among analysts tracked by FactSet, though revenue beat expectations.
For the full year, Toll Brothers earned $13.49 a share on just under $11 billion of revenue. Wall Street had expected a profit of $13.83 a share from revenue of $10.81 billion.
The stock was down 3.2% in early trading.
The shortfall in earnings per share was driven by a delay in completing the sale of roughly half of Toll Brothers' multifamily business, not its home-building activities, KBW analyst Jade Rahmani wrote Monday evening.
Management's financial forecasts were likely the focus among investors.
The company forecast earnings per share for the current fiscal year will land in a range with a midpoint of $12.36, Rahmani wrote, lower than the $13.83 the analyst expected. Toll Brothers expects to deliver 1,800 to 1,900 homes to customers in its first quarter, and 10,300 to 10,700 for all of 2026. It expects its margin in 2026 to be 26%, it said.
The downbeat forecasts result from a tough environment for selling homes, company executives noted on a call discussing results on Tuesday.
"I want to emphasize that our assumptions and estimates are based on current market conditions, which [...] are choppy," Toll Brothers Chief Financial Officer Gregg Ziegler said on a call with analysts. "We have not assumed any market improvement in our forecast."
It has been a bumpy year for both home sales and builders. As of Friday's close, the iShares U.S. Home Construction exchange-traded fund, which includes home builders and related companies, was down 0.7% this year, on pace for its worst yearly performance since 2022, according to Dow Jones Market Data.
Builders' underperformance has come as high housing costs have squeezed would-be buyers out of the market. Many builders' profit margins have narrowed as companies have offered incentives and cut prices to move homes.
The ingredients for improving home sales are there, Toll Brothers CEO Douglas C. Yearley, Jr. noted on the call.
"Mortgage rates have stabilized in the low-6% range and may go lower," he said. Millennials are still in their prime homebuying years, he added, with Gen Z not far behind, and more home construction is still needed to meet that demand. "All of these trends support demand for new homes," Yearley said.
Whether those factors will improve the math for home builders in 2026 won't be clear until the housing market exits its usual slow period at the end of the year and in early winter.
"The real tell for whether the housing market can accelerate will be the spring selling season, which starts in late January," Yearley said on the call.
Write to Shaina Mishkin at shaina.mishkin@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
December 09, 2025 10:18 ET (15:18 GMT)
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