Updated from 11:40 a.m. EST
Toll Brothers (TOL) sent shivers through the homebuilding sector Tuesday, after the luxury-home vendor tempered its forecast for 2006, based on disappointing new order numbers in its just finished fourth quarter. Toll plunged 14% to $34. While Toll's high-end offerings can make it a poor barometer for the construction industry as a whole, investors nevertheless sold down the entire homebuilding sector Tuesday. The Philadelphia Housing Sector Index fell 5.4%. Even though Toll also posted healthy fourth-quarter sales figures, in which revenue jumped 39% year over year to $2.01 billion, investors clearly focused on the latest quarterly order numbers, which rose just 1% on a unit basis to 2,272 homes. Some analysts were projecting 15% growth in orders. On the company's conference call Tuesday afternoon, a few things stood out: demand has for the most part peaked for Toll's properties across the country, price increases are slowing down, and getting new homes built is becoming a more difficult process. Add it all up, and it's likely that quarterly earnings numbers will become rockier for Toll and possibly other homebuilders. On the call, Toll's management stressed that the fourth-quarter order shortfall was largely due to problems with getting new communities opened in time, primarily because of the regulatory process. Because of this delay, the company said it likely will reduce its earnings growth projections for 2006. Toll said regulatory pressures, nervous buyers and pricing issues could weigh on earnings growth. The company will give an update on final numbers when it announces earnings Dec. 8. Robert Toll, the company's chief executive, said on the call that whereas housing permit approvals used to take one month, now they're generally taking two to three months. The company expects to deliver 9,500 to 10,200 homes in fiscal 2006, down from its previous estimate of 10,200 to 10,600.TheStreet Premium Services For Personal Service: 877-471-2967
Jim Cramer's Action Alerts PLUS:
Trade right alongside a Wall Street pro — enjoy access to his Charitable Trust portfolio and be sent trade alerts BEFORE he makes a move. Learn MoreETF Profits:
Get money-making ideas from the hottest investment vehicle on the planet. Our experts show you how to play various ETF sectors to help pump-up your portfolio. Learn MoreOptionsProfits:
Get 50+ trade ideas a week from the industry's top options experts. Plus — exclusive commentary on market trends and essential trading tools. Learn MoreReal Money:
Our team of professional Wall Street Pros — including Jim Cramer, Doug Kass, and Nicholas Vardy — delivers intelligent analysis, timely trade ideas, and colorful commentary. Learn MoreStocks Under $10:
Break into the market with small- and mid-cap stocks... all $10 or less! David Peltier tells you exactly which low-priced stocks he's buying and selling. Learn MoreTo begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
blog comments powered by Disqus
| Dow Jones | S&P 500 | NASDAQ | 10-Year Note | |
|---|---|---|---|---|
| 12,801.23 | 1,342.64 | 2,903.88 | 19.69 |
Oil *
117.67
|
|
DOWN
89.23 |
DOWN
9.31 |
DOWN
23.35 |
DOWN
0.78 |
10 Yr
1.97%
SPDR Gold
167.14
|
|
-0.69%
|
-0.69%
|
-0.80%
|
-3.81%
|
Data delayed 20 minutes |

Connect with TheStreet