Toll Brothers, a leading home builder, exceeded analyst expectations with its fourth-quarter and full-year earnings report. The company earned $4.11 per diluted share on a revenue of approximately $3 billion in Q4, resulting in fiscal-year earnings of $12.36 per diluted share on a revenue of around $10 billion. This surpassed the predicted earnings of $3.72 per share on $2.8 billion in sales for the quarter and $11.97 per share on $9.7 billion in revenue for the full year, according to FactSet.
Investors responded positively to the news, as shares rose by 3.5% during premarket trading on Wednesday.
Toll Brothers attributed the positive results, in part, to the recent decline in mortgage rates. Douglas C. Yearley, Jr., Chairman and CEO of Toll Brothers, expressed his optimism for the upcoming spring selling season: “With resale inventories at historic lows, buyers continue to be drawn to new homes, and we expect lower rates with lower inflation to add to this already solid demand.”
The company’s strategy of expanding its range of home offerings at lower price points, along with an increased focus on spec homes and growing its community count, positions them well for the current market conditions.
In Q4, Toll Brothers delivered 2,755 homes and contracted 2,038 homes. For the fiscal year 2023, they achieved 9,597 deliveries and had 8,077 homes under contract. Looking ahead to 2024, the company anticipates an increase in deliveries, estimating a range of 9,850 to 10,350 homes. Their community count is also set to rise by approximately 10%, reaching 410 by the end of next year.
Long-term prospects for the new home market remain promising, according to Yearley. Factors such as the aging housing supply, demographic changes, and a significant gap between demand and supply support this positive outlook.
Toll Brothers will provide more in-depth analysis of their results during a call scheduled for Wednesday morning.