Toll Brothers Beats Q3 Earnings & Revenue Estimates on Higher Pricing

On a macro level, the company continued to navigate a challenging housing market. Still, management highlighted the resilience of its affluent customer base and the strength of the luxury-focused business model.

TOL’s Quarterly Earnings & Revenue Discussion

The company reported diluted earnings per share (EPS) of $2.97, which beat the Zacks Consensus Estimate of $2.90 by 2.4% but declined 20.4% year over year from $3.73.

In the fiscal third quarter, total revenues of $2.66 billion surpassed the consensus mark of $2.60 billion by 2.4% but fell 9.7% from the year-ago quarter.

Inside Toll Brothers’ Q3 Results

For the quarter under review, Toll Brothers’ home sales revenues decreased 7.9% year over year to $2.65 billion from $2.88 billion. Home deliveries declined 10% to 2,662 units from 2,959 units in the year-ago quarter.

Despite the lower volume, the average delivered price increased 2.3% year over year to $996,400 from $973,600, helping cushion the impact of fewer deliveries. The company ended the quarter with 471 selling communities compared with 420 in the prior-year period.

Toll Brothers’ Orders Grow While Backlog Stays Solid

Order momentum remained a constructive indicator in the quarter. Net signed contracts increased 5% year over year to 2,508 homes, while contract value rose 4.3% to $2.52 billion from $2.41 billion. The average price of signed contracts was $1,002,900 compared with $1,010,100 a year ago.

Backlog ended the quarter at 5,312 homes valued at $6.24 billion, down 3.3% and 2.2%, respectively, from the prior-year period. The average price of homes in backlog increased to $1,174,400 from $1,161,000. Quarterly cancellations represented 5.4% of signed contracts, improving from 7.5% a year ago.

TOL Faces Margin Pressure From Costs

While operations were sufficient to drive an earnings beat, profitability remained under pressure. Home sales gross margin declined to 23.9% from 25.6% a year ago, while adjusted home sales gross margin fell to 25.6% from 27.5%. Nonetheless, adjusted gross margin came in 35 basis points above management’s guidance.

SG&A increased to 10% of home sales revenues from 8.8%, further constraining year-over-year profitability. Income from operations declined to $359.2 million from $487.7 million. Joint venture impairments totaled $39.6 million, while inventory impairments and write-offs included in home sales cost of revenues were $17.7 million compared with $23.3 million a year ago.

Toll Brothers’ Capital Position Supports Shareholder Returns

Toll Brothers continued returning capital while maintaining substantial liquidity. The company repurchased about 1.4 million shares during the quarter for $206.8 million at an average price of $148.63. It also paid a quarterly dividend of 26 cents per share.

Cash and cash equivalents totaled $1.06 billion at quarter-end, down from $1.26 billion at fiscal 2025 year-end and $1.11 billion at the end of the fiscal second quarter. Available liquidity under the senior unsecured revolving credit facility was $2.24 billion. The debt-to-capital ratio improved to 24.5% from 24.7% in the prior quarter, while net debt-to-capital increased to 15.6% from 15.4%.

TOL Updates Q4 & FY26 Targets

For the fourth quarter of fiscal 2026, TOL expects deliveries of 3,450-3,550 units and an average delivered price of $995,000-$1,005,000. Adjusted home sales gross margin is projected at 26%, while SG&A is estimated at 8.1% of home sales revenues. The tax rate is projected at 26%.

For fiscal 2026, TOL forecasts deliveries of 10,500-10,600 units. The estimated range reflects a decline from the fiscal 2025 level of 11,292. Average delivered price is expected at $995,000-$1,000,000, indicating growth from $960,200 in fiscal 2025. The company continues to see adjusted home sales gross margin at 26.10% (a decline from the 27.3% reported in fiscal 2025) and SG&A at 10.10% of home sales revenues, with period-end community count projected at 480-490. Management also increased projected fiscal 2026 share repurchases to $700 million from $650 million.

TOL’s Zacks Rank & Recent Construction Releases

Toll Brothers currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Martin Marietta Materials, Inc. MLM reported outstanding second-quarter 2026 results, wherein adjusted earnings (from continuing operations) and revenues topped the Zacks Consensus Estimate and increased year over year.

Martin Marietta’s results benefited from strong organic performance and contributions from acquisitions. Aggregates shipments increased 17% to a record 61.6 million tons, supported by infrastructure and heavy nonresidential demand. Heavy nonresidential demand also benefits from data center, power-generation and warehouse construction. Martin Marietta raised its 2026 revenue guidance to a range of $7.2-$7.4 billion, with a midpoint of $7.3 billion.

CRH plc CRH reported exceptional second-quarter 2026 financial results with adjusted earnings and total revenues topping the Zacks Consensus Estimate and growing year over year. Positive pricing, favorable demand and acquisition contributions supported the quarterly growth. CRH completed 11 acquisitions during the quarter for $1.1 billion.

The company reaffirmed 2026 net income guidance of $3.9-$4.1 billion, adjusted EBITDA guidance of $8.1-$8.5 billion and earnings guidance of $5.60-$6.05 per share. CRH expects public infrastructure spending and reindustrialization activity to support demand, while new-build residential conditions remain subdued.

Quanta Services, Inc. PWR reported better-than-expected second-quarter 2026 results, with adjusted earnings and revenues beating the Zacks Consensus Estimate. The company’s performance benefited from strong demand for grid, generation and data-center infrastructure, broader self-perform capabilities, efficient resource utilization and solid execution across both segments.

Quanta increased its 2026 revenue forecast to $39.3-$39.7 billion, representing a $4.55 billion increase at the midpoint from its prior outlook. Adjusted earnings are now projected to be in the range of $16.45-$16.95 per share, while adjusted EBITDA is expected to be between $4.09 billion and $4.21 billion. Free cash flow is forecast to be in the $2-$2.5 billion range.

Zacks' Research Chief Names "Stock Most Likely to Double"

Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.

This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research