TOL Preview: Keep the Faith?

Toll Brothers (TOL - commentary - Cramer's Take) is scheduled to report its second-quarter 2008 results before the market opens on Tuesday and conduct its quarterly conference call in the middle of the same afternoon. The company is expected to lose 15 cents on net revenue of $752.6 million.

While the April quarter is not the busiest for the homebuilders, it does straddle the busy part of the year, which will typically extend through June.

Looking carefully at Toll's earnings history, the company over the last few quarters (most recent first) lost 61 cents, lost 52 cents, earned 16 cents and earned 22 cents. Looking at that time series of numbers, the homebuilder's earnings have declined sequentially for those quarters, however, analysts are expecting some improvement in the current quarter.

I typically refer to last conference call as "The Glimmers of Hope" call, in which Bob Toll saw indications of improvement in certain geographies. Since then, however, many of Toll Brothers' peers -- including DR Horton (DHI - commentary - Cramer's Take), Lennar (LEN - commentary - Cramer's Take) and Pulte Homes (PHM - commentary - Cramer's Take), which all reported within the last three weeks -- were not upbeat at all. That being said, across the board, all of the companies have been cleaning up their balance sheets in preparation of the next cycle in homebuilding.

---

At the time of publication, Rothbort had no positions in the stocks mentioned, although positions can change at any time.

Scott Rothbort has over 20 years of experience in the financial services industry. In 2002, Rothbort founded LakeView Asset Management, LLC, a registered investment advisor based in Millburn, N.J., which offers customized individually managed separate accounts, including proprietary long/short strategies to its high net worth clientele. He also is the founder and manager of the social networking educational Web site TheFinanceProfessor.com.

Immediately prior to that, Rothbort worked at Merrill Lynch for 10 years, where he was instrumental in building the global equity derivative business and managed the global equity swap business from its inception. Rothbort previously held international assignments in Tokyo, Hong Kong and London while working for Morgan Stanley and County NatWest Securities.

Rothbort holds an MBA in finance and international business from the Stern School of Business of New York University and a BS in economics and accounting from the Wharton School of Business of the University of Pennsylvania. He is a Term Professor of Finance and the Chief Market Strategist for the Stillman School of Business of Seton Hall University.

For more information about Scott Rothbort and LakeView Asset Management, LLC, visit the company's Web site at www.lakeviewasset.com. Scott appreciates your feedback; click here to send him an email.