Toll Brothers 3Q Profit Rises, Delivers More Homes

That too, must be put into context. Any reading below 50 indicates negative sentiment about the housing market. The index hasn't been in positive territory since April 2006, the peak of the housing boom.

For the three months ended July 31, Toll Brothers Inc. earned $61.6 million, or 36 cents per share. That compares with $42.1 million, or 25 cents per share, a year ago.

Aside from its high-end buyers and signs of a housing market recovery, the Horsham, Pa. company's results benefited from lower write-downs during the period. The current quarter included $3.1 million in inventory write-downs. It recorded write-downs more than five times that large last year.

Toll Brothers' performance handily beat the 18 cents per share that analysts polled by FactSet expected.

The homebuilder's stock jumped $1.05, or 3.3 percent, to $32.86 in morning trading. Earlier in the session the stock rose to $33.68, the highest it's been since early 2007.

Revenue increased to $554.3 million from $394.3 million, up 41 percent. That topped Wall Street's estimate of $515.2 million.

"We believe Toll Brothers' results suggest improvement in operating profitability going forward, while the company's balance sheet continues to position it well to invest," said Jade Rahmani of Keefe, Bruyette & Woods.

Toll Brothers' home deliveries climbed 39 percent to 963 units during the quarter, with the average price of those homes rising to $576,000 from $569,000.

Backlog increased 44 percent to 2,559 homes, while net signed contracts climbed 57 percent to 1,119 units.

Yearley said the housing recovery is being driven by low interest rates, attractive home prices and pent-up demand.

Toll Brothers anticipates fourth-quarter home deliveries of 800 to 1,000 units at an average price of $570,000 to $590,000 per home. If the company accomplishes that goal, it would have 2012 home sale revenue of $1.71 billion to $1.84 billion and total home deliveries of 3,000 to 3,200 units. It previously predicted home deliveries of 2,700 to 3,200 units.

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