The luxury homebuilder's quarterly profit and sales rose but missed analysts' estimates, and its order growth was the slowest in six quarters. Fred Katayama reports.
Toll Brothers' quarterly profit surged higher and sales rose. But the luxury homebuilder disappointed investors. Those results fell shy of analysts' estimates. Orders rose nearly 15 percent, with all regions seeing gains except the North. But that was the slowest growth in six quarters. Orders are key because they're a metric of future revenue. As for that top line, Toll sees its full-year revenue growing. But it forecasts its adjusted gross margin will decline. One bright spot: the average selling price of its homes increased. Toll's prices had earlier been under pressure because it's catering to millenials with a new line of lower priced homes. The results took a toll on its high-flying stock, which dropped at the market open Tuesday. The stock has risen 63 percent this year. Credit Suisse senior analyst Susan Maklari, who is raising her price target on the company's shares, said, "Toll has leveraged its strong capital structure and unique positioning to drive operational and financial improvement in its results." Demand for housing is strong in the U.S., bolstered by a robust jobs market. But homebuilders haven't been able to fully reap the gains because higher labor and materials costs have constrained supply.