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TheStreet Open House

Forbes Earnings Preview: Toll Brothers

By Narrative Science



After Toll Brothers (TOL) took a loss of 6 cents a year ago, analysts think when the company reports this year's second quarter numbers on Wednesday, May 23, 2012, the results will be a lot better. Analysts are expecting profit of 4 cents a share.

What to Expect:

Over the past month, the consensus estimate has risen from 3 cents, but it's the same as the estimate from three months ago. For the fiscal year, analysts are expecting earnings of 34 cents per share.

Revenue is projected to be 18.6% above the year-earlier total of $319.7 million at $379.3 million for the quarter. For the year, revenue is projected to roll in at $1.73 billion.

Trends to Watch For:

Toll Brothers' loss in the most recent quarter came after two previous quarters of profitability. The company reported a loss of $2.8 million in the first quarter and a profit of $15 million in the fourth quarter of the last fiscal year and profit of $42.1 million in the third quarter of the last fiscal year.

Over the last four quarters, revenue has fallen an average of 2% year-over-year. The biggest drop came in the third quarter of the last fiscal year, when revenue fell 13.2% from the year-earlier quarter.

Analyst Ratings:

The majority of analysts (60%) rate Toll Brothers as a buy. This compares favorably to the analyst ratings of its nearest 10 competitors, which average 35.4% buys. Wall Street has warmed to the stock over the past three months, with the average analyst estimate increasing to moderate buy from hold. Last quarter, four of 15 rated it a buy and one rated it a sell.

Competitors:

Toll Brothers is engaged in the design and construction of single-family detached and attached luxury homes. It also arranges financing for these homes. One of Toll Brothers' main competitors in the household durables industry is Lennar (LEN). Other competitors in the consumer discretionary sector include: PulteGroup (PHM), MDC Holdings (MDC), and D.R. Horton (DHI).

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