TOL

Toll Brothers has recently expanded its luxury footprint with new and upcoming communities across Georgia, Texas, California, Nevada, New York, Tennessee, Washington, and by opening select model homes for sale, while also reporting third-quarter 2026 revenue of US$2,658.78 million and net income of US$280.15 million. The combination of broad-based high-end community growth, design-focused offerings like Tesla Powerwalls and mid-century modern architecture, and reaffirmed 2026 delivery guidance highlights Toll Brothers’ emphasis on affluent buyers and product differentiation despite a softer quarter year over year. We’ll now examine how this pipeline of higher-end, amenity-rich communities across multiple regions may influence Toll Brothers’ existing investment narrative. This technology could replace computers: discover 24 stocks that are working to make quantum computing a reality. To own Toll Brothers, you need to believe its focus on affluent buyers and design-heavy, luxury communities can offset softer year-over-year earnings and margin pressure from higher incentives and spec inventory. The latest wave of high-end openings across multiple states reinforces the key short term catalyst of community count growth, but does not materially change the biggest current risk around spec exposure and potential pricing pressure if demand cools further. Among the recent announcements, Crestview at Bickford in California stands out in the context of Toll Brothers’ catalyst of expanding high priced, amenity rich communities. With homes expected to start around US$1.3 million and features like Tesla Powerwalls, dual staircases, and extensive outdoor access, it illustrates how the company is leaning into product differentiation at the upper end, even as guidance pegs 2026 deliveries at 10,500 to 10,600 units. Yet behind these premium launches, investors should also be aware of rising incentives and what they could mean if buyer demand starts to... Read the full narrative on Toll Brothers (it's free!) Toll Brothers’ narrative projects $13.2 billion revenue and $1.5 billion earnings by 2029. This requires 6.1% yearly revenue growth and about a $0.2 billion earnings increase from $1.3 billion today. Uncover how Toll Brothers' forecasts yield a $168.20 fair value, a 16% upside to its current price. While the baseline view focuses on community growth and margin pressure, the most optimistic analysts, who once projected earnings of about US$1.6 billion, see these luxury launches as potentially reinforcing Toll Brothers’ pricing power and cash buyer resilience, reminding you that expectations can differ sharply and may shift again as this new pipeline plays through results. Explore 6 other fair value estimates on Toll Brothers - why the stock might be worth 7% less than the current price! Disagree with existing narratives? Extraordinary investment returns rarely come from following the herd, so go with your instincts. A great starting point for your Toll Brothers research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision. Our free Toll Brothers research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Toll Brothers' overall financial health at a glance. Opportunities like this don't last. These are today's most promising picks. Check them out now: Uncover the next big thing with 22 elite penny stocks that balance risk and reward. The future of work is here. Discover the 37 top robotics and automation stocks leading the charge in AI-driven automation and industrial transformation. Find 46 companies with promising cash flow potential yet trading below their fair value. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include TOL. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Toll Brothers’ results for Q2 reflected resilience amid a challenging housing market, as the company’s revenue and non-GAAP earnings per share both exceeded Wall Street expectations. Management attributed this performance to steady demand among affluent buyers, success in the luxury move-up segment, and disciplined pricing. CEO Karl Mistry pointed to Toll Brothers’ focus on expanding community count and maintaining margin discipline, stating, “Our strategy is durable precisely because it is built on differentiated capabilities that enable us to create value even when market conditions are less favorable.” Is now the time to buy TOL? Find out in our full research report (it’s free). Revenue: $2.66 billion vs analyst estimates of $2.62 billion (9.7% year-on-year decline, 1.6% beat) Adjusted EPS: $2.97 vs analyst estimates of $2.92 (1.6% beat) Operating Margin: 14.6%, down from 17.4% in the same quarter last year Backlog: $6.24 billion at quarter end, down 2.2% year on year Market Capitalization: $13.62 billion While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention. John Lovallo (UBS) asked how much conservatism was built into Q4 gross margin guidance, to which CFO Gregg Ziegler explained that expected margin improvement is due to favorable regional and buyer mix, particularly more luxury move-up settlements and earlier-stage spec sales. Stephen Kim (Evercore) questioned the sustainability of lower owned lot counts amid community growth. CEO Karl Mistry responded that efficient land banking and increased use of optioned lots enable continued expansion without raising risk. Alan Ratner (Zelman) probed whether luxury move-up demand could slow as macro conditions change. Mistry replied that no material shift has been seen, highlighting stable cash and loan-to-value ratios and the company’s differentiated offerings. Michael Dahl (RBC Capital Markets) asked about muted sales momentum in July and potential impacts on Q4 delivery and margin timing. Mistry clarified that while July was softer, it was in line with seasonal patterns, and Ziegler said timing of settlements, not a change in business mix, explained margin guidance shifts. Rafe Jadrosich (Bank of America) asked about Buffington’s contribution and purchase accounting impacts. Mistry indicated Buffington added several community sales, while Ziegler confirmed purchase accounting would slightly drag on gross margin in the near term. In the coming quarters, the StockStory team will be monitoring (1) the pace of new community openings and their impact on sales absorption, (2) the margin trends in the luxury move-up segment as incentives and input costs fluctuate, and (3) the integration and performance of new markets, including contributions from recent acquisitions like Buffington. We will also watch for any indications of shifting demand in key geographies or buyer segments. Toll Brothers currently trades at $147.49, up from $142.86 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free for active Edge members). ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively. Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.

A luxury builder in a soft market has bought back enough stock to outrun three years of shrinking profits, and the question is what happens when land competes for the same cash. Toll Brothers (TOL) has gained 7.7% over the past year but slipped over the last six months, and it trades about 10% below its 52-week high, a quiet year for a builder whose management described the sales environment in August as subdued. Over the last three years, earnings per share rose while net income fell, and what closed that gap was not the business but the share count. Toll Has Bought Itself Back Faster Than Profits Fell Averaged over those three years, net income has fallen 2.8% a year while earnings per share have risen 2.3% a year. Nothing operational explains the difference; it is arithmetic. The company has retired about 5.1% of its shares a year on average across that stretch, and 4.8% in the past twelve months alone, so each remaining owner's claim on a smaller profit pool grew anyway. With the dividend added, the whole payout is a 5.3% shareholder yield, once stock compensation is netted out. A Million-Dollar Buyer, And Upgrades Across The Board That yield is funded by a narrow, wealthy slice of the housing market. The luxury move-up business, where the average home sells for about $1.35 million, was roughly 61% of home sales revenue in fiscal Q3 2026 and carries the highest margin of the company's buyer segments. The spending does not stop at signing: across Toll's buyers as a whole, upgrades, structural options and lot premiums averaged $207,000 a home in the quarter, and management says design studio work of that sort is highly accretive to margin. Pricing holds best where it matters most: the more expensive the home, the smaller the incentive as a share of its price. Growth Gets The Cash Before Shareholders Do Free cash flow covers the buybacks and dividends about 1.6 times over, but the payout is not what that cash is aimed at first. Management puts growth first in the capital-allocation order and funds repurchases out of the operating cash flow that is left, and growth here means land: roughly $452 million spent on land acquisition in fiscal Q3 2026, against $2.65 billion of home sales revenue in that quarter. So far that cash flow has covered both, and the fiscal 2026 repurchase plan was raised to $700 million from $650 million. Net debt runs at about 1.1 times EBITDA, a moderate load rather than a stretched one. Balance sheets of that kind are a standing feature of the Trefis High Quality Portfolio's holdings. Cheap Against Earnings That Still Move With The Cycle At 10.9 times trailing earnings, the market is not asking much for the engine. That is a case for patience rather than a promise. Over three years the stock returned 96% in price, though it was up 119% at its peak and has handed some of that back, and buybacks were only one contributor alongside a moving multiple. The engine is real and funded; the profits it works on have shrunk over the last three years, and management, four years into a difficult housing market, is not yet calling a bottom. Whether the retirement pace survives a leaner year is the open question, and the dividend and buyback record is where the answer shows up first. A Cheap Compounder Is Still One Cyclical Bet An engine that quietly retires stock is worth owning, but it sits inside one industry and one housing cycle. Investors who want that compounding spread across many businesses rather than one builder can start with the Trefis High Quality Portfolio. That portfolio has a track record of outpacing the three major indices - the S&P 500, S&P Mid-cap, and Russell 2000.

Image source: The Motley Fool. Wed, Aug. 19, 2026 at 8:30 a.m. ET Executive Chairman - Douglas Yearley Chief Executive Officer - Karl Mistry Chief Financial Officer - Gregg Ziegler President and Chief Operating Officer - Seth Ring Operator: Good morning, and welcome to the Toll Brothers Third Quarter Fiscal Year 2026 Conference Call. [Operator Instructions] The company is planning to end the call at 9:30 when the markets open. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Doug Yearley, Executive Chairman. Please go ahead. Douglas Yearley: Thank you, Betsy. Good morning. Welcome, and thank you all for joining us. With me today are Karl Mistry, Chief Executive Officer; Gregg Ziegler, Chief Financial Officer; and Seth Ring, President and Chief Operating Officer. During today's call, I will provide a brief overview of our third quarter results and current market conditions. Karl will discuss our operating performance and trends across our markets, and Gregg will review our financial results and our outlook. Before we begin, please note that many statements on this call are forward-looking based on assumptions about the economy, world events, housing and financial markets, interest rates, the availability of labor and materials, inflation and many other factors beyond our control that could significantly affect future results. Please read our statement on forward-looking information in our earnings release of last night and on our website to better understand the risks associated with our forward-looking statements. We are pleased with our third quarter performance. In a challenging housing market, we continue to produce solid results. We delivered 2,662 homes and generated $2.6 billion of home sales revenue, exceeding the midpoint of our guidance in both units and dollars. Adjusted gross margin was 25.6% or 35 basis points better than guidance, and we generated $280.1 million of earnings or $2.97 per diluted share, which also beat guidance. Net signed contracts increased 5% compared to the third quarter of last year. Demand from luxury buyers remained relatively resilient, and we continue to benefit from the expansion of our community count. While orders improved, the overall sales environment remained subdued with low consumer confidence and elevated mortgage rates continuing to weigh on demand. Consistent with our long-standing approach, we continue to prioritize price discipline and margin performance over sales pace, a strategy that we believe is particularly important in the current environment. We also remain focused on our luxury move-up customer and build-to-order business, where, as the nation's leading builder of luxury homes, we are uniquely positioned to serve affluent buyers across a wide range of markets and product offerings. Over our nearly 60-year history, we have built a tremendous brand and a differentiated business model with advantages that include highly desirable community locations, distinctive home designs, extensive personalization opportunities and exceptional customer experiences. These strengths have helped us attract a customer base with greater financial resilience, one that is less affected by affordability challenges due to higher income levels, substantial existing home equity and sizable stock portfolios. Our third quarter results further demonstrate the strength of our business model. Our strategy is durable precisely because it is built on differentiated capabilities that enable us to create value even when market conditions are less favorable. And while we remain focused on executing in the current environment, we are well positioned to accelerate growth, margins and returns when market conditions eventually improve. During the quarter, we returned approximately $231 million to stockholders through dividends and share repurchases while continuing to invest in the growth of our business through disciplined investments in new land. We continue to project significant operating cash flow in 2026 and are increasing our projected stock repurchases for the year to $700 million, up from our previous projection of $650 million. We remain on track to deliver 8% to 10% community count growth in fiscal 2026, which will be our third consecutive year of 8% to 10% growth. Our existing land position supports similar community count growth in fiscal '27 and beyond. Finally, I note that our balance sheet remains very strong with ample liquidity, low leverage and substantial operating cash flows. Our financial strength will enable us to continue investing in growth while returning capital to our stockholders. With that, I will turn the call over to Karl. Karl Mistry: Thank you, Doug, and good morning, everyone. As Doug mentioned, our third quarter results were solid. We beat on both the top and bottom lines and positioned the company to deliver another year of healthy profitability and returns in fiscal 2026. Our adjusted gross margin was 25.6% in the quarter or 35 basis points better than guidance, reflecting the disciplined execution of our sales strategy and our more efficient operations. We signed 2,508 net agreements in the quarter for $2.5 billion, up 5% in units and 4% in dollars. This increase was once again driven by the successful execution of our growth strategy. At quarter end, we were selling from 471 communities versus 420 at the end of the third quarter of fiscal 2025. We remain focused on opening new communities across the country and continue to expect to end the year with 480 to 490 selling communities. Based on our strong year-to-date performance and our outlook for the fourth quarter, we are reaffirming all of our full year guidance metrics, including an adjusted gross margin of 26.1% and home sales revenues of approximately $10.5 billion. In addition, we now expect our average delivered price to be between $995,000 and $1 million for the full year. At the midpoint of our settlements guidance, this increase is expected to generate approximately $53 million of additional revenue over prior guidance. Turning to market trends. As Doug mentioned, the demand environment remained challenging in the third quarter. These conditions have continued through the first 2.5 weeks of our fourth quarter. Against this backdrop, we are pleased that we were able to increase sales by 5% year-over-year, modestly reduce incentives and maintain our margins in the quarter. Geographically, stronger markets included Florida, Boston through the Carolinas, Boise, Idaho, Las Vegas and Reno in Nevada and Denver, Colorado. More challenging markets included Atlanta, Seattle, Portland, San Francisco and Texas. Among our buyer segments, our luxury move-up business continued to perform the best. And as Doug mentioned, we are leaning into this core segment where we see great deal flow that meets our high underwriting standards. Our move-up business accounted for approximately 61% of home sales revenues in our third quarter, while our luxury first-time and move-down businesses represented approximately 23% and 16%, respectively. Not only does our luxury move-up business remain the largest contributor to revenues, but it also generates the highest margin among our buyer segments. Importantly, in this market, the higher the price of our homes, the lower the incentive as a percentage of sales price. The continued strength of our luxury business reflects the resiliency of our affluent customer base, the desirability of our communities and product offerings and the appeal of the Toll Brothers brand. We also continue to carefully manage spec starts to align with demand on a community-by-community basis while actively managing the composition of our spec inventory. During the third quarter, we continued to reduce our inventory of spec homes. At quarter end, finished specs averaged 1.9 homes per community, down from 2 at the end of the second quarter and 2.8 at the start of fiscal year 2026. As a reminder, the margin profile of spec homes sold before framing is completed is significantly higher than the margin on finished specs. Our objective is to sell spec homes as early as possible in the construction cycle when incentives are typically lower and customers have greater opportunities to personalize their homes at our design studios. Personalization remains an important competitive advantage for Toll Brothers as design studio upgrades are highly accretive to margins. Overall, upgrades, structural options and lot premiums averaged $207,000 or 24% of our average base sales price in the quarter. As Doug mentioned, during the quarter, we continued to carefully balance sales pace, pricing and incentives to drive sales while maximizing returns. Incentives on our net signed contracts averaged approximately 7.5% of gross sales price in the quarter, down modestly from approximately 8% over the past year and consistent with our strategy of selling specs earlier in the construction cycle when buyers can still personalize their homes in our design studios. Approximately 25% of our buyers paid all cash in the quarter. Among buyers who financed their purchase, the average loan-to-value was approximately 69%, highlighting the financial strength of our customer base. In the third quarter, we continued to realize the benefits of production improvements and our cycle time for build-to-order homes remains stable at approximately 9 months. The cycle time for our spec homes is generally about 1 month shorter than build-to-order homes. Overall, our building costs remained relatively flat in the quarter even as the cost of the lumber rose during the period. Turning to land. At third quarter end, we owned or controlled approximately 75,500 lots, 58% of which were optioned. We spent approximately $452 million on land acquisition in the quarter. We remain focused on securing high-quality land at attractive returns with a continued emphasis on capital efficiency and rigorous underwriting standards. With that, I'll turn it over to Gregg. Gregg Ziegler: Thanks, Karl. As mentioned in the third quarter, we delivered 2,662 homes and generated home sales revenue of $2.65 billion. We earned $374.8 million before taxes and $280.1 million after or $2.97 per diluted share. The average delivered price of homes in the quarter was approximately $996,000, above the high end of our guidance range and driven primarily by mix, including a greater-than-expected proportion of luxury move-up and Pacific deliveries. We signed 2,508 net agreements for $2.5 billion in the quarter, up 5% in units and 4% in dollars compared to the third quarter of fiscal 2025. The average price of contracts signed in the quarter was approximately $1.003 million versus $1.03 million in the third quarter of fiscal 2025. Our third quarter adjusted gross margin was 25.6% or 35 basis points better than our guidance of 25.25%. The outperformance was also driven by mix as well as continued benefits from improved operating efficiencies across the business. Write-offs in our home sales gross margin totaled $17.7 million in the quarter. Approximately $5 million of these related to predevelopment costs and option write-offs on deals we dropped that no longer met our underwriting standards. SG&A as a percentage of revenue was 10.0% in the third quarter, in line with our guidance. Joint venture, land sales and other income was $6 million in the third quarter compared to $15 million in the third quarter of last year and our guidance of $5 million. Our cancellation rate was 2.6% of beginning quarter backlog as compared to 3.2% in the prior year period. As a percentage of signed contracts in the third quarter, cancellation rate was 5.4% versus 7.5% in last year's third quarter. We are pleased with our industry-low cancellation rate. It highlights the attachment our buyers develop while personalizing their new homes in our design studios as well as the financial commitment they make in the form of a significant down payment. Our tax rate in the third quarter was 25.3% compared to guidance of 26.0%. We ended the third quarter with approximately $3.3 billion of liquidity, including $1.1 billion of cash and $2.2 billion of availability under our revolving bank credit facility. Our net debt-to-capital ratio was 15.6% at third quarter end compared to 19.3% one year ago. Turning to our guidance. I will remind you that our projections are subject to all of the caveats regarding forward-looking statements included in our earnings release. We are projecting fiscal 2026 fourth quarter deliveries of 3,450 to 3,550 homes with an average delivered price between $995,000 and $1.005 million. For the full year, we are narrowing our settlement range and increasing our average delivered price range. We now project between 10,500 and 10,600 delivered homes at an average price between $995,000 and $1 million, which equates to an approximate $53 million increase in our full year home sales revenue guidance. We continue to expect a full year adjusted gross margin of 26.1% and projected fourth quarter margin of 26.0%. We expect interest and cost of sales to be approximately 1.1% in the fourth quarter and for the full year. We project fourth quarter SG&A as a percentage of home sale revenues to be approximately 8.1%. For the full year, we continue to project an SG&A margin of 10.1%. Other income, income from unconsolidated entities and land sales gross profit in the fourth quarter is expected to be approximately $30 million and approximately $120 million for the full year. We project the fourth quarter tax rate to be approximately 26.0% and the full year rate to be approximately 25.2%. We expect our community count to be between 480 and 490 at fiscal year-end, an 8% to 10% increase versus the 446 at fiscal year-end 2025. Our weighted average share count is expected to be approximately 94 million for the fourth quarter and $95 million for the full year. These amounts reflect our increased projection of $700 million of share repurchases for the full year. Through the end of our third quarter, we have already completed $433 million of share repurchases. Now let me turn the call back to Karl. Karl Mistry: Thank you, Gregg. And before I open it up for questions, last month, we marked an exciting milestone for Toll Brothers, celebrating our 40th anniversary as a publicly traded company on the New York Stock Exchange. I'd like to thank all of our Toll employees for their contributions over the years. It is their passion for our business, dedication to our luxury brand and commitment to our customers that will ensure our continued success. Betsy, I think with that, we can open it up to questions. Operator: [Operator Instructions] As a reminder, the company is planning to end the call at 9:30 when the market opens. [Operator Instructions] The first question today comes from John Lovallo with UBS. John Lovallo: The first one is your outlook implies a 30% plus quarter-over-quarter increase in deliveries at the midpoint, and that's going to drive about a 40 basis point increase in gross margin sequentially. Now understanding that you've exceeded your gross margin outlook in 15 consecutive quarters by an average of 65 basis points on average. I mean, how much conservatism is baked in here given just the uncertainty in the macro? Karl Mistry: John, it's Karl. Let us talk a little bit about -- you mentioned Q4 and how we're going to get to the number. I'll let Gregg talk about the margin. 2,700 of our projected 3,500 homes for the midpoint of the quarter will come from backlog. So those are scheduled and already in our backlog, which leaves 800 homes that need to sell and settle within the quarter. We have about 900 finished specs. Many of those will be part of that 800 and then nearly 1,000 behind those that are at a stage of construction where they can also close by the end of Q4. So we feel great about the 3,500 number. Gregg, do you want to talk about the margin? Gregg Ziegler: Yes, John, thanks for asking about Q4 gross margin. The dynamics at play there are that we think we're going to have a little positive mix coming out of certain regions to be specific, our North and our Pacific region. And the buyer segment side, it looks like we'll have a little bit more luxury move-up settlements. Also, we talked about this last quarter, but the specs that are going to deliver in Q4, we sold them at an earlier stage of construction. And as Karl mentioned in his prepared remarks, that is helpful to gross margin. So those are the dynamics at play for Q4. John Lovallo: And then on the 8% to 10% community count growth expected in this year, but also now into fiscal year '27 and beyond. I mean, I guess the question is what would sort of derail this expected growth? I mean, in other words, if the market were to remain soft next year, which is not our expectation, would you pull back on community count growth at all? Or is that plan pretty much in place? Karl Mistry: No, John. We feel very good about the 8% to 10%. Many of those communities are well underway in a lot of cases, model homes under construction. The current market environment would not lead us to modify that even a softening market. We're committed to getting these communities open. Operator: The next question comes from Stephen Kim with Evercore. Stephen Kim: Appreciate all the color so far. I guess my first question relates to your land supply. Your owned lot count has continued its steady decline on a year-over-year basis, even as your community count has continued to grow. I'm curious how much lower do you think you can take that owned lot count given your continued growth plans? Karl Mistry: Thanks for the question, Steve. Yes, we're happy with the progress that we've moved that back. Our owned land for backlog is sort of in this 1.5- to 2-year range. And I think the reason we've been able to execute this way is a couple of things. We have been land banking now for a few years, still carefully and modestly. But as you know, that contributes to more in the option and control bucket versus owned. And then being that we are oftentimes at a less competitive table acquiring land, we're able to get seller financing, and that has also contributed to us being able to be more efficient with all of our land acquisitions. So it's both of those factors. Stephen Kim: Yes. That's great. So in other words, I assume you're saying basically, you think you can continue to take it down. I just want to be clear on an absolute lot basis. Karl Mistry: Yes. I think that's right. As the company grows on an absolute lot basis, it may turn the other way. But the 1.5- to 2-year range of owned, we feel good about. Operator: The next question comes from Alan Ratner with Zelman. Alan Ratner: Nice quarter. So obviously, given your commentary, it sounds like luxury move-up is still an outperformer for you guys. The last month or two, it seems like there's been a few headlines out there suggesting the K-shape economy might be coming to an end. And talking to some move-up builders, anecdotally, we're hearing a little bit more chatter about buyers either having difficulty selling an existing house or just concerns about equity embedded in their existing home. So I'm just curious, over the last month or two, have you seen any even incremental shifts suggesting that outperformance we've been seeing for the last several years at luxury might be coming to an end or at least softening a little bit? Karl Mistry: Thanks, Alan. It's Karl again. The short answer is no. We haven't seen any sort of material change. As we outlined, 25% of the buyers still paying cash, 70% loan-to-value is extremely sticky. We've actually been able to -- about 30% of our communities were able to raise prices in the quarter. So we feel really good about where we are. We've worked hard to build an infrastructure here so we can build in these unique locations. And the rest of the things we outlined in our script around choice and architecture and the customer experience give us that differentiated edge even over the custom builder community. So our buyer is holding in there. Alan Ratner: That's great to hear. And can you just refresh my memory how you guys handle contingent sales? So if a buyer has an existing home to sell, how you treat that both from an accounting standpoint and whether you refund deposits if they ultimately can't sell their house? Karl Mistry: Yes. We do not offer the traditional home sale contingencies you're referencing. We don't do that at all. So if we have a finished spec and a customer puts money down on a home that might close in 30 days, internally, we look at that as a contingency even though that money is not refundable. But it's -- from an accounting perspective, it is not an agreement in our system until that home is closed. Operator: The next question comes from Mike Dahl with RBC Capital Markets. Michael Dahl: Just to delve in a little bit more on the current dynamics. You mentioned the challenging market conditions and the first couple of weeks of the quarter have remained challenging. Can you just give us a flavor for maybe some quantification around that through the quarter and August and especially the last couple of years, you've had kind of an abnormal sequential uptick in your sales pace in 4Q versus 3Q. And I think normally, it's down more like low double digits sequentially. So just if you could help us a little bit more on how we're supposed to interpret that, that would be great. Karl Mistry: Yes. Mike, it's Karl again. So I'll give you a little bit on Q3. We saw the typical step-up within the quarter. So May to June was better. June to July was better. After the fourth, there's generally a bit of a pop in July. And while there was, it was a little bit more muted. Certainly, the mortgage rates ticking higher in July, consumer confidence going the other direction and I'll call it, renewed geopolitical uncertainty, we had greater expectations for July. And that has -- we've sort of continued on so far in Q4. But I'd caution you to draw too much of a conclusion there. We're 2, 2.5 weeks into August. And so it's just too early. Michael Dahl: And then just shifting gears to the margin side. I appreciate that your -- that the efforts in terms of the mix of specs and then the overall mix dynamics and the incentives seem to be suggesting that there's some momentum there. When you think about kind of the -- I guess, 2 parts, the beat in the quarter and then 4Q guide is slightly light of where you previously expected. How much of that is a mix dynamic in terms of kind of pulling forward some stuff into 3Q? And how much is potentially in light of the past month or so, maybe a bit more of a reduction in expectations on what those spec margins may provide in the fourth quarter? Gregg Ziegler: Mike, it's Gregg. Thanks for that question. It's the former. It's really just timing of settlements. All the dynamics we laid out for you 90 days ago and how we thought the second half of fiscal 2026 would play out remain intact. It's just that we had some timing differences in terms of when some of the -- whether it was geographic or buyer segment or spec settlements actually hit in Q3 or now expect to hit in Q4. That's the real reconciliation. Operator: The next question comes from Rafe Jadrosich with Bank of America. Rafe Jadrosich: Just first, can you just talk about the impact from Buffington in the quarter and what's expected in the fiscal fourth quarter? I think you had some communities that opened. I'm not sure if there are any sales and if there's any impact from absorption from that? And is there any purchase accounting in the gross margin? Karl Mistry: Rafe, we are super excited about Buffington. They joined our team in May. We've had a typical summer. They have contributed with about half a dozen open communities. I think the guys are confirming. I think it was around 30 sales in the quarter, maybe 25 settlements. I think we're expecting a little bit better than that in Q4. Gregg Ziegler: And your last point on purchase accounting, yes, purchase accounting will have that drag on the gross margin, which is factored into the guidance. Rafe Jadrosich: And then on the starts outlook, it looked like the fiscal third quarter at least pre-footing was up, I think, over 30% year-over-year. So it's a pretty big acceleration. Can you just talk about what's driving that, like why you accelerated? And then what's expected for the fiscal fourth quarter? Karl Mistry: Yes. Rafe, as we outlined, we're still -- we still manage this on a community-by-community basis and week-to-week. And I think over time, we continue to improve and refine our process here. So we outlined we have reduced finished specs, which are now down to 1.9. We're very happy with that because we're now sort of toward the end of the selling season and the end of the summer. And so you began building specs again to get ready for spring. As you know, our spring selling season starts in mid-January and it's going to go through Memorial Day. So some of that is timing to meet seasonality of demand. Operator: The next question comes from Sam Reid with Wells Fargo. Richard Reid: I wanted to drill down a little bit more on some margin topics. You mentioned that there was a bit of a pullback, it sounds like in incentives. Some of that sounds like it's mix, but could you also talk to perhaps any tweaks in your incentive buckets that might also be influencing that? Gregg Ziegler: Sam, it's Gregg. No real tweaks in the incentive bucket, meaning our buyers are not taking mortgage buydowns with any greater velocity or anything like that. So there's nothing really that changed there. Sometimes around that overall incentive that appears to us can be around mix of settlements and which home sites were sold with which incentive, but no big shift there. Richard Reid: And then maybe switching gears to lot costs. Just some early perspective on what lot costs could potentially look like into next year, lot cost inflation, I guess, I should say. You've got some good visibility based on some of the communities that you're opening. So I would just love some perspective on the type of lot inflation we should see potentially on the lookout for. Karl Mistry: Yes, Sam, I'll give you some detail here to help. About 70% of our land spend so far year-to-date has been in our sort of core luxury segment. And we like it there. That's -- those are the deals that are working. The land inflation question is a tough one for us because we don't buy a lot of commoditized land nor do we buy too much land in master planned communities phase after phase after phase where we can point to a prior year or prior years and look at inflation. So hard for us to say partially because we have very low competition for most of our land. Operator: The next question comes from Trevor Allinson with Wolfe Research. Trevor Allinson: SG&A has been hovering in the 9% to 10% range for the last several years. That's a bit better than where it was pre-COVID, but you also have some good community count growth coming online next year and then also in years after that, it sounds like. So how do you expect SG&A to trend over the next couple of years? Is 9% to 10% a good range for you? Or what's the right level of SG&A moving forward? Karl Mistry: Trevor, yes, we -- I think that's right, 9% to 10%. We built this company to build more homes than we are today with the infrastructure and people we have in place. So the 10% that you see today is in an environment where absorptions are below our historical average. So in a more normal environment, I think we could be squarely in the 9s. But I'm really pleased with the effort the team has put forth to get us to where we are. Trevor Allinson: Yes. And then second question on vertical costs. I think the general commentary from most builders have been they've been able to push back on some of these building product price increases. So maybe excluding lumber, have you also been able to fend off the price increases? And for products that you have either annual or multiyear contracts for, is there a risk for a bigger step-up in pricing once those contracts roll over, which potentially could drive some input cost inflation for you guys into 2027? Seth Ring: Trevor, this is Seth. Our build costs are flat. Lumber is slightly up and a potential headwind, but those cost increases have been offset with other modest reductions. And so far, we've fended off other longer-term cost increases. So build costs are flat is our response there, Trevor. Operator: The next question comes from Jay McCanless with Citizens. Jay McCanless: Thinking about community count for next year, anything from a geographic standpoint worth calling out, either a little heavier mix on luxury move-up or more focused on the Pacific or the North segment? Karl Mistry: Yes, Jay, next year, we have more concentration in our community openings in the South and the mountain regions where we've been investing for some time. We're excited about that. These are markets where people have been moving, where we have great operational performance. And I do think the luxury segment is going to continue to go up sort of our move-up core business as a percentage looks like it's going to climb next year as a percentage of our community openings. Jay McCanless: And then second question I had, just thinking about development costs, higher diesel costs, et cetera. What are you all starting to see there on the horizontal development side? Any type of cost increases, fuel surcharges, anything we need to think about from a gross margin perspective? Karl Mistry: Jay, surprisingly quiet. We have not heard too much about it from our land development teams. I would characterize that as flat as well. Operator: The next question comes from Ryan Gilbert with BTIG. Ryan Gilbert: I wanted to ask about spec mix, and I apologize if I missed this, but I think generally, you've been targeting around 50-50 spec versus build-to-order, but I heard more of a focus potentially on build-to-order. So should we expect that mix to shift more to build-to-order in the quarters ahead? Karl Mistry: Ryan, we're -- about 52% of settlements in the quarter were spec that represented about 44% of revenues. We've messaged before, we're happy with this 50-50 mix. It's going to flex up a few percent in either direction. Again, we build this up at the ground level community by community. So I don't think you can read too much into a longer-term change. We'll manage it week-to-week and quarter-to-quarter. Ryan Gilbert: And then order growth in the North has been growing at a pretty substantial pace. It seems like it decelerated a bit in the third quarter. Anything to call out in terms of why orders would be decelerating there? Karl Mistry: No, nothing specifically. I think they're a victim of their outperformance over some time. They're still the best absorbing region by far. We're very proud of our footprint here in our backyard and the teams that are building it. So it's still doing great. It's just -- it's their relative performance why it's modestly down. Operator: The next question comes from Susan Maklari with Goldman Sachs. Susan Maklari: My first question is on the capital allocation side. It's nice to hear you incrementally raising the guide for the buybacks as we get into the end of this year. Can you just talk generally about how you're thinking of capital allocation and shareholder returns as we start to think about fiscal '27? Karl Mistry: Sure, Susan. First and foremost, for us, we still have the opportunity to grow our business. And you've seen that reflected in our community count growth now for several years and our guidance for next year, and we think beyond. So first and foremost, as we think about capital allocation, it is growth. It's smart growth. It's profitable growth, and that will continue to be our focus where we know we have a lot of opportunity. I think after that, we've worked really hard to build a balance sheet we're very proud of. And so our leverage is down materially over the last several years, and we're just in a very good place. And then with the balance, the cash flow from operations that we generate, we've been able to repurchase shares and this year, fortunately been able to improve that guidance now to $700 million. And then our dividend, which has now been around for some time is there and continues to grow on an annual basis. So that's how I think about the ladder there of capital allocation. But first and foremost, it's smart profitable growth. Susan Maklari: And then maybe thinking more broadly, one of the trends that we're seeing within the industry overall is more of your peers are moving into the build-to-order and a relatively higher price point just given the macro and the state of the consumer. Can you talk about how you're able to leverage your established presence in that kind of an operating strategy and what that means for Toll as we think about the evolving landscape? Douglas Yearley: Susan, this is Doug. I'm going to take this one. I've enjoyed listening to these guys to answer all the questions. And I guess this is a good one for me to step in on. We've heard this in the past, the other builders that tend to focus on production at a lower price point and really think about merchant homebuilding have on occasion when market conditions suggest they should move up in price. And respectfully to my good friends in the industry, over time, the tail goes between the legs and they run back down to entry. It is a very difficult business. We have spent 60 years differentiating ourselves. We have the brand in the industry. We have 45-plus design studios in every market that are spectacular where our clients go and are blown away by all the choices they have to customize their homes. We know how to buy land at the corner of Main and Main in very special locations. And so I totally understand it. I understand that our buyer is able to weather this more difficult market because of their affluence and their strength. But we have no concerns whatsoever. We will continue to differentiate ourselves and continue doing the business that we have always done and will continue to do. Operator: The next question comes from Alex Barron with Housing Research Center. Alex Barrón: Yes, I was hoping you could expand on Buffington and M&A in general. How did you find this opportunity? And how do you think in general about M&A for Toll Brothers going forward? Karl Mistry: Alex, Buffington, we're -- again, we're super excited. We've got to spend some time there in the spring and understand Northwest Arkansas. I think we were a great fit for that team for a couple of reasons, higher average sales price. It was sort of the luxury segment in the market, and that was certainly attractive to us. And so when the introduction was made, it felt right for them as well. We did not have an operation in Arkansas. So we were fortunately able to bring on all of those employees, now our colleagues. And so we like that type of bolt-on M&A, which we have done now for 30 years. I think we're up to 16 of these acquisitions that we've done over 30 years. And we like that size kind of bolt-on. It certainly seems as evidenced by some of the very large transactions and a few of our mid-cap friends moving to the private sector that consolidation in the industry is here and could continue. We like our playbook of careful bolt-on opportunities with companies that complement our brand and are executing well today. So you shouldn't see any difference from us as it relates to M&A. We like how we've been doing it. Alex Barrón: Great. And when it comes to the trend for incentives and margins, what's your outlook as you -- I guess, as far as your crystal ball can tell you? Douglas Yearley: It's Doug again. We're running at a 26% margin with an ROE that we're very proud of in what is a tough market, and we're now 4 years into a tough market. Our incentives at 7.5% or 8% are elevated. Our sales pace per community is below historic norms and below the high 20s, even in the low 30s that we've achieved in the past. The move-up and build-to-order business is at the moment running at a significantly lower incentive, but not as low as it was in a better market. And so I look at where we're operating today in this difficult market, achieving the ROE we're achieving, achieving the gross margin at 26%, I know we're getting closer to the end of this cycle. I've been doing this for 36 years, and these cycles run and time is on our side because 4 years in is long. I know every cycle has its own dynamics. But as I said to the guys yesterday, that light at the end of the tunnel, I am sure is not a train coming at us anymore, but it is light. I just can't tell you when we're going to get there. But when we do and when those incentives come back closer to historic norms and when those sales paces go back up higher to more historic norms, this margin and these returns are going to grow. So we are in a really good position. We have the land to show community count growth. We are operating so efficiently. It is really an exciting time, not for today selling a house necessarily, but for where we are headed and how we are positioned. And so I am not here to call the bottom, but I am really proud of the returns we are generating in a tough market and look out when things improve. Operator: The next question comes from Matthew Bouley with Barclays. Matthew Bouley: I wanted to ask on the gross margins into '27 to the extent you're willing to outline some expectations. I mean even without a hard guide, just any, I guess, detail on sort of the pluses and minuses across mix that we should consider into '27. I heard you earlier on the spec mix expectations, but whether it's regional mix, community mix, land, lot costs and everything you just talked about on incentives, any kind of way to sort of point the direction into early '27? Karl Mistry: Matt, it's Karl. I don't think we're ready to do any sort of nod to '27 just yet. I understand your question. I'd point you to what we've said before, maybe building on Doug's commentary there. We think in a normal environment, 26% to 28% gross margins is now how this company is built. We structurally changed how we started our underwriting new land acquisition over 10 years ago that has now been in place and is contributing to our outperformance today. But as far as giving you specifics for next year, we're not ready to do that. Matthew Bouley: And then secondly, just on ASP. Obviously, kind of looking at the backlog where it is, and it looked like obviously fairly stable, if not growing order price this quarter. But as you look out into '27, thinking similar type of question around the mix side of it, communities and regions, et cetera. Is there a view that the order -- or excuse me, the delivered ASP can continue to grow similar to the way it has in 2026? Karl Mistry: Yes. I think we will share that. I think it builds on what I said earlier about our community openings next year, some of where they're located and with a higher percentage of luxury, we do think that 2027 could be up. Operator: The next question comes from Jade Rahmani with KBW. Jason Sabshon: This is Jason Sabshon on for Jade. So just taking on the 8% to 10% community count growth that you expect to continue into 2027. How much of that would you expect to translate to stronger delivery growth? Should we view them in isolation or as correlated? Gregg Ziegler: Jason, it's Gregg. That was really hard because we're -- we can't give you guidance on what that throughput per community might look like. It's all back to the comments that Doug and Karl have mentioned on how excited we are for how well positioned the company is. And as the market improves over time, then we'll see that through our results. Jason Sabshon: And then just on mix, as you continue to emphasize luxury move-up, it would be helpful to quantify like the differences in gross margin, the spread between the various segments and luxury move-up the first time and move down. Karl Mistry: Yes, Jason, I think that's -- we're going to get some homework and get back to you on that. What I will -- what we will say, and I touched on this during the script, as price goes up, our incentive as a percentage of home price goes down. And so we are outperforming from a margin perspective with the business that built this company, which is move-up, core move-up luxury. And so directionally, that we know to be the case, but we'll have to get back to you if you want the further breakdown. Douglas Yearley: I think it's important to point out, and it goes back to my earlier question about other builders focusing a little bit more on the move-up business. Our average luxury move-up home is selling for $1.35 million, and that's 61% of our business. And that is the business that built this company, and we are seeing more and more land opportunities for that niche, which is so important to us. And more of that, of course, is build-to-order than it is spec. While we do spec some move-up, of course, naturally more of the spec occurs at the lower price point. So when the other builders talk about wanting to get into move-up, and I know many of them already do, some move up, I don't think they have in their minds $1.35 million as their average move-up price. And so even as they move up or as they want to spend more of the pie in that part of the business, it's really not approaching the land that we are buying because it really comes down to who are we competing with for the land that we want to buy to grow our business. And so I think we are -- our move-up is just a different business than the move-up that the others are even contemplating spending more time in. And that business is growing for us as we see more and more of those land opportunities. It is the highest margin. We are more and more focused on it. There's less competition for that land. Towns want us to build it because of how we operate. So we're a bit more accepted into difficult towns because we are Toll with our brand. And so I just think it's important to clarify that's a big number, $1.35 million for 60% and a growing part of our business. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to management for any closing remarks. Karl Mistry: No, that's it, Betsy. Thank you, everybody, for your interest in our company. Have a great rest of your summer, and we'll talk to you again at the end of the year. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. Before you buy stock in Toll Brothers, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Toll Brothers wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $431,488!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,279,584!* Now, it’s worth noting Stock Advisor’s total average return is 958% — a market-crushing outperformance compared to 212% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of August 25, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Toll Brothers (TOL) Q3 2026 Earnings Call Transcript was originally published by The Motley Fool

Track your investments for FREE with Simply Wall St, the portfolio command center trusted by over 7 million individual investors worldwide. Toll Brothers (TOL) stock came into focus after the builder reported third quarter results that topped analyst forecasts for revenue and earnings per share, while reaffirming its full year 2026 operating guidance. See our latest analysis for Toll Brothers. The positive reaction to Toll Brothers' earnings and reaffirmed 2026 guidance fed into an already strong trend, with a roughly 10.46% 90 day share price return and a 13.89% 1 year total shareholder return supporting the longer term 3 year total shareholder return of 93.08%. If the latest move in Toll Brothers has you thinking about what else is working in housing related themes, it could be a good time to check out 21 top founder-led companies. After this latest jump in Toll Brothers, the question is whether much of the easy gain is already reflected in the US$148.58 share price, or if the current valuation still points to meaningful upside ahead. The current Toll Brothers share price of $148.58 sits below the fair value narrative of $160.00, which frames the latest move as part of a wider valuation story. Read the complete narrative. Want to see what holds this $160 fair value together? The narrative leans heavily on earnings resilience, measured revenue growth and a profit margin profile that still looks robust on a multi year view. Those assumptions are doing a lot of work in the Toll Brothers story. The key question is how delivery volumes, margins and contract trends feed into that valuation over time, and where the balance between growth and capital returns really sits. Result: Fair Value of $160 (UNDERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, Toll Brothers still faces risks if housing affordability tightens again or if margins stay under pressure, which could challenge the current fair value narrative. Find out about the key risks to this Toll Brothers narrative. With Toll Brothers showing both potential and pressure points, it makes sense to review the data yourself and decide where you stand. To see how this mix of concerns and opportunities balances out, take a closer look at the 3 key rewards and 1 important warning sign If you stop with Toll Brothers, you risk missing other opportunities the market is offering right now. Broaden your watchlist using these focused stock ideas. Target dependable income by reviewing companies in the 12 dividend fortresses that may align with your yield and stability goals. Hunt for potential value opportunities by scanning the 52 high quality undervalued stocks where pricing and fundamentals may look more attractive than current sentiment suggests. Prioritise capital protection by checking the 78 resilient stocks with low risk scores and focus on stocks that aim to keep risk scores on the lower side. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include TOL. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Interested in Toll Brothers Inc.? Here are five stocks we like better. Toll Brothers exceeded its Q3 fiscal 2026 guidance, delivering 2,662 homes and $2.65 billion in home sales revenue, while adjusted gross margin reached 25.6%. Net signed contracts increased 5% year over year to 2,508 homes worth $2.5 billion. Contract growth was supported by community expansion to 471 selling communities, with 480–490 expected by fiscal year-end. Management emphasized pricing and margin discipline despite subdued demand, elevated mortgage rates and weak consumer confidence. The company reaffirmed its approximately $10.5 billion full-year revenue and 26.1% adjusted-margin outlook, raised its average delivered-price forecast to $995,000–$1 million, and increased planned fiscal 2026 share repurchases to $700 million. Forget AI for a Moment, This Homebuilder Is Stealing the Show Toll Brothers (NYSE:TOL) reported third-quarter fiscal 2026 results that exceeded its guidance for deliveries, home sales revenue, adjusted gross margin and earnings, while management said the housing market remained subdued amid elevated mortgage rates and weak consumer confidence. The luxury homebuilder delivered 2,662 homes during the quarter and generated $2.65 billion in home sales revenue. Net income was $280.1 million, or $2.97 per diluted share, on pretax income of $374.8 million. Adjusted gross margin was 25.6%, exceeding the company’s guidance by 35 basis points. → Looking Beyond CrowdStrike? 3 AI Security Stocks Stand Out 3 Names to Watch as Homebuilders Near Breakout Net signed contracts rose 5% from the prior-year quarter to 2,508 homes, representing $2.5 billion in value, up 4% in dollars. Executive Chairman Doug Yearley said the company’s luxury buyer base remained relatively resilient, though broader demand conditions continued to be difficult. Chief Executive Officer Karl Mistry said the increase in contracts was driven by the company’s continued community-count expansion. Toll Brothers was selling from 471 communities at the end of the third quarter, compared with 420 communities a year earlier. The company expects to finish fiscal 2026 with 480 to 490 selling communities, representing 8% to 10% growth from the 446 communities at the end of fiscal 2025. → 3 Robotics Stocks Under $10: Value, Momentum, or Bet? Toll Brothers: A Great Buy and Hold Stock With Risks in 2025 Management said its existing land position supports similar community-count growth in fiscal 2027 and beyond. Mistry said communities planned for the coming year are more concentrated in the South and Mountain regions, with a higher percentage serving the luxury move-up segment. The company’s strongest markets in the quarter included Florida; the region from Boston through the Carolinas; Boise, Idaho; Las Vegas and Reno, Nevada; and Denver. More challenging markets included Atlanta, Seattle, Portland, San Francisco and Texas. → Michael Burry Is Betting Against Palantir Again—Should Investors Care? Luxury move-up homes represented about 61% of third-quarter home sales revenue, while luxury first-time and move-down customers accounted for approximately 23% and 16%, respectively. Mistry said luxury move-up is the company’s largest revenue contributor and its highest-margin buyer segment. Yearley said Toll Brothers’ average luxury move-up home sells for $1.35 million. He said the company sees growing land opportunities in that segment and faces less competition for certain sites than builders operating at lower price points. Management said Toll Brothers continued to prioritize pricing and margins over sales pace. Incentives on net signed contracts averaged about 7.5% of gross sales price, modestly below the approximately 8% level of the past year. The company raised prices in roughly 30% of its communities during the quarter, according to Mistry. About 25% of buyers paid cash during the quarter. For buyers who financed their purchases, the average loan-to-value ratio was approximately 69%. Toll Brothers also continued reducing finished speculative-home inventory. Finished specs averaged 1.9 homes per community at quarter-end, down from 2.0 at the end of the second quarter and 2.8 at the beginning of fiscal 2026. Management said it aims to sell speculative homes early in the construction process, when incentives tend to be lower and customers can still select upgrades through the company’s Design Studios. Upgrades, structural options and lot premiums averaged $207,000 in the quarter, equal to 24% of the average base sales price. Build-to-order cycle time remained about nine months, while speculative homes generally require about one month less to complete. Building costs were relatively flat during the quarter, according to management, as higher lumber costs were offset by modest reductions in other costs. President and Chief Operating Officer Seth Ring said the company had so far avoided longer-term cost increases outside of lumber. Mistry also described horizontal development costs as flat. Toll Brothers reaffirmed its full-year fiscal 2026 adjusted gross-margin outlook of 26.1% and its approximate $10.5 billion home sales revenue outlook. The company narrowed its expected full-year delivery range to 10,500 to 10,600 homes and increased its projected average delivered price to between $995,000 and $1 million. Management said the higher average-price forecast is expected to add about $53 million to full-year home sales revenue compared with its previous guidance. For the fourth quarter, Toll Brothers expects to deliver 3,450 to 3,550 homes at an average delivered price of $995,000 to $1.005 million, with adjusted gross margin of about 26.0%. Chief Financial Officer Gregg Ziegler said anticipated fourth-quarter margin benefits include favorable geographic mix from the North and Pacific regions, a greater contribution from luxury move-up deliveries, and the expected delivery of speculative homes sold earlier in the construction cycle. The company ended the quarter with approximately $3.3 billion of liquidity, including $1.1 billion of cash and $2.2 billion available under its revolving credit facility. Its net debt-to-capital ratio was 15.6%, down from 19.3% a year earlier. Toll Brothers spent approximately $452 million on land acquisitions during the quarter and owned or controlled about 75,500 lots, 58% of which were optioned. Management said it continues to pursue land investments under rigorous underwriting standards, with approximately 70% of year-to-date land spending directed toward its core luxury segment. The company returned approximately $231 million to shareholders during the quarter through dividends and share repurchases. It increased its projected fiscal 2026 repurchases to $700 million from $650 million, and had completed $433 million in buybacks through the third quarter. Toll Brothers also discussed its May acquisition of Buffington Homes, which expanded its presence into Northwest Arkansas. Mistry said Buffington operated about a half-dozen open communities and contributed roughly 30 sales and about 25 settlements during the third quarter. Ziegler said purchase accounting related to the acquisition will reduce gross margin and has been included in the company’s guidance. Management said it remains focused on smaller bolt-on acquisitions that complement its luxury brand, rather than pursuing a different approach to mergers and acquisitions. Toll Brothers, Inc is a publicly traded homebuilding company that focuses on designing and constructing luxury residential properties. The company's core business encompasses a broad range of housing products, including custom single-family homes, upscale condominium communities and rental apartment ventures. Toll Brothers emphasizes high-end finishes and architectural craftsmanship, positioning itself in the premium segment of the U.S. housing market. In addition to traditional homebuilding, Toll Brothers operates specialized divisions to address evolving consumer preferences. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Toll Brothers Q3 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

This article first appeared on GuruFocus. Home Sales Revenue: $2.6 billion in Q3 fiscal 2026, exceeding the midpoint of guidance. Deliveries: 2,662 homes in Q3, above the midpoint of guidance. Adjusted Gross Margin: 25.6% in Q3, 35 basis points better than guidance. Earnings: $280.1 million, or $2.97 per diluted share, beating guidance. Net Signed Contracts: 2,508 agreements for $2.5 billion, up 5% in units and 4% in dollars year-over-year. Average Delivered Price: Approximately $996,000 in Q3, above the high end of guidance. SG&A as Percentage of Revenue: 10.0% in Q3, in line with guidance. Cancellation Rate: 2.6% of beginning quarter backlog, down from 3.2% in the prior year period. Tax Rate: 25.3% in Q3, compared to guidance of 26.0%. Liquidity: Approximately $3.3 billion, including $1.1 billion of cash and $2.2 billion of revolving credit availability. Net Debt to Capital Ratio: 15.6% at Q3 end, down from 19.3% one year ago. Capital Returned to Stockholders: Approximately $231 million through dividends and share repurchases in Q3. Share Repurchases: Increased full-year projection to $700 million, up from $650 million; $433 million completed through Q3. Community Count: 471 selling communities at quarter end, up from 420 in Q3 fiscal 2025; expected to reach 480-490 by fiscal year end. Land Acquisition Spend: Approximately $452 million in Q3. Lots Owned or Controlled: Approximately 75,500 lots, 58% optioned. Full-Year Guidance: Reaffirmed adjusted gross margin of 26.1% and home sales revenues of approximately $10.5 billion; average delivery price now expected between $995,000 and $1 million. Warning! GuruFocus has detected 3 Warning Signs with EL. Is TOL fairly valued? Test your thesis with our free DCF calculator. Release Date: August 19, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Toll Brothers Inc (NYSE:TOL) delivered strong Q3 results, beating guidance on deliveries, revenue, and earnings per share. Net signed contracts increased 5% year-over-year, driven by resilient luxury buyer demand and community count expansion. Adjusted gross margin of 25.6% exceeded guidance by 35 basis points, reflecting disciplined pricing and operational efficiencies. The company raised its full-year share repurchase guidance to $700 million, demonstrating confidence in cash flow and shareholder returns. Community count growth of 8% to 10% is on track for fiscal 2026 and expected to continue into fiscal 2027, supported by a strong land pipeline. The overall sales environment remains subdued, with low consumer confidence and elevated mortgage rates weighing on demand. Challenging market conditions persisted into the first weeks of Q4, with July sales pace below expectations due to higher rates and geopolitical uncertainty. Incentives remain elevated at approximately 7.5% of gross sales price, though slightly reduced from prior year levels. Certain markets, including Atlanta, Seattle, Portland, San Francisco, and Texas, are experiencing more challenging demand conditions. The company faces potential headwinds from rising lumber costs and the drag of purchase accounting from the Buffington acquisition on gross margins. Q: How much conservatism is baked into the fourth-quarter delivery and gross margin guidance, given the implied 30%+ quarter-over-quarter increase in deliveries?A: Karl Mistry (CEO) explained that 2,700 of the projected 3,500 homes at the midpoint are already in backlog, with the remaining 800 to come from finished specs and homes under construction, providing high confidence in the delivery number. Gregg Ziegler (CFO) added that the Q4 margin guidance reflects positive mix shifts from the North and Pacific regions, a higher proportion of luxury move-up settlements, and the benefit of selling specs earlier in the construction cycle, which is accretive to margins. Q: Given the challenging market conditions, have you seen any incremental shifts suggesting the outperformance of the luxury move-up segment is softening?A: Karl Mistry (CEO) stated that the short answer is no, noting that 25% of buyers are still paying all cash, the average loan-to-value is a very sticky 69%, and 30% of communities were able to raise prices during the quarter. He emphasized that the company's differentiated infrastructure, unique locations, and customer experience provide a competitive edge that keeps the affluent buyer base resilient. Q: Can you provide more color on the current demand dynamics in the first few weeks of the fourth quarter, and how should we interpret the sequential sales pace?A: Karl Mistry (CEO) noted that while the third quarter saw the typical step-up in sales from May to June and June to July, the post-July 4th pop was more muted than expected due to higher mortgage rates, lower consumer confidence, and renewed geopolitical uncertainty. He cautioned against drawing too much of a conclusion from just 2.5 weeks of data, stating it is too early to call a trend. Q: How much of the third-quarter gross margin beat and the slight change in fourth-quarter expectations is due to timing versus a reduction in spec margin expectations?A: Gregg Ziegler (CFO) clarified that the dynamics are purely a timing issue related to settlements. The strategic assumptions laid out 90 days ago for the second half of fiscal 2026 remain intact; the only difference is whether certain geographic, buyer segment, or spec settlements hit in Q3 or are now expected to hit in Q4. Q: What was the impact of the Buffington acquisition in the quarter, and what is expected in the fourth quarter?A: Karl Mistry (CEO) expressed excitement about the acquisition, noting the team joined in May and contributed roughly 30 sales and 25 settlements from about half a dozen open communities in Q3, with expectations for slightly better performance in Q4. Gregg Ziegler (CFO) added that purchase accounting will create a drag on gross margin, which is already factored into the guidance. Q: Can you discuss the recent acceleration in starts and what is driving it?A: Karl Mistry (CEO) explained that the company manages starts on a community-by-community basis. The increase reflects the successful reduction of finished specs to 1.9 per community and the strategic need to begin building new specs to prepare for the spring selling season, which starts in mid-January, aligning production with seasonal demand. Q: What is your outlook for SG&A as a percentage of revenue over the next couple of years given the community count growth?A: Karl Mistry (CEO) indicated that the 9% to 10% range is the right target. He noted that the current 10% level is in an environment where absorptions are below historical averages, and the company has built the infrastructure to support more homes. In a more normal environment, he believes SG&A could be squarely in the 9% range. Q: How are you thinking about capital allocation and shareholder returns as you look into fiscal 2027?A: Karl Mistry (CEO) outlined the capital allocation ladder, prioritizing smart, profitable growth through community count expansion. After that, the company focuses on maintaining a strong balance sheet with low leverage. With the remaining cash flow, they have increased share repurchases to $700 million for the year and continue to grow the dividend annually. Q: How do you view the competitive threat from other builders moving into the build-to-order and higher price point segments?A: Douglas Yearley (Executive Chairman) dismissed the threat, stating that other builders often retreat back to entry-level production when markets get tough. He highlighted Toll Brothers' 60-year history of differentiation through its brand, 45+ design studios, and ability to secure prime land locations. He emphasized that the company's average luxury move-up home sells for $1.35 million, a price point and business model that competitors are not equipped to replicate. Q: Can you provide any early perspective on lot cost inflation heading into next year?A: Karl Mistry (CEO) noted that about 70% of land spend year-to-date has been in the core luxury segment. He explained that it is difficult to quantify lot inflation because the company does not buy commoditized land or master plan phases where historical comparisons are easy. However, the low competition for their land deals helps mitigate inflationary pressures. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Performance outperformance was driven by a disciplined focus on price and margin over sales volume, particularly within the luxury move-up segment which represents 61% of revenue. Management attributes the resilience of their demand to an affluent customer base characterized by high incomes, substantial home equity, and lower sensitivity to mortgage rate fluctuations. The company successfully reduced finished spec inventory to 1.9 homes per community, prioritizing early-cycle sales to maximize personalization opportunities and margin-accretive design studio upgrades. Strategic community count growth of 8% to 10% served as a primary volume driver, offsetting a broader sales environment weighed down by low consumer confidence and elevated rates. Operational efficiencies and stable cycle times of approximately 9 months for build-to-order homes helped maintain margins despite modest increases in lumber costs. Geographic performance was bifurcated, with strength in Florida and the Carolinas contrasting with more challenging conditions in Seattle, Portland, and Texas. Fiscal 2026 guidance assumes a continued challenging macro environment, with Q4 delivery targets supported by a backlog of 2,700 homes and a healthy pipeline of nearly 1,000 specs. Management expects to sustain 8% to 10% community count growth through fiscal 2027, supported by existing land positions and a focus on the South and Mountain regions. The company increased its full-year share repurchase projection to $700 million, reflecting confidence in significant operating cash flow generation and balance sheet strength. Future margin expansion is predicated on a return to historical sales paces and the eventual reduction of incentives, which currently remain elevated at 7.5% to 8%. Strategic land acquisition will continue to emphasize capital efficiency, targeting a 1.5 to 2-year range for owned land while utilizing options and land banking to manage risk. The acquisition of Buffington Homes in Northwest Arkansas represents a strategic bolt-on M&A entry into a new market, contributing approximately 30 sales in the third quarter. Write-offs of $17.7 million were recorded, with approximately $5 million related to predevelopment costs and options for land deals that no longer met rigorous underwriting standards. Purchase accounting related to the Buffington acquisition is expected to act as a minor drag on gross margins in the near term. Management noted that while July demand was more muted than expected due to rate volatility, they remain committed to their long-term growth trajectory regardless of short-term market softening. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management confirmed that even if the market remains soft, they will not pull back on the 8% to 10% community count growth plan as many projects are already well underway. The existing land position is sufficient to support this growth rate through fiscal 2027 and beyond. Doug Yearley emphasized that Toll Brothers' move-up business, with an average price of $1.35 million, is distinct from production builders attempting to move up-market. The company relies on its 60-year brand heritage, extensive design studios, and ability to secure 'Main and Main' locations to maintain a competitive moat. Management clarified that there has been no significant shift in the types of incentives offered; buyers are not taking mortgage buydowns with greater velocity. The modest reduction in incentives to 7.5% is largely attributed to selling spec homes earlier in the construction cycle. Building costs remained flat overall as lumber headwinds were offset by other modest reductions; management has successfully fended off price increases from other suppliers. Horizontal land development costs, including fuel and diesel, were also characterized as surprisingly stable.

Toll Brothers, Inc. TOL reported third-quarter fiscal 2026 (ended July 31) results, with earnings and revenues beating the Zacks Consensus Estimate. However, both top and bottom lines declined on a year-over-year basis.TOL’s top-line beat was supported by higher delivered pricing, which partly offset lower home deliveries. The company’s average price on home deliveries increased from the prior-year quarter, while net signed contracts also grew year over year.On a macro level, the company continued to navigate a challenging housing market. Still, management highlighted the resilience of its affluent customer base and the strength of the luxury-focused business model. The company reported diluted earnings per share (EPS) of $2.97, which beat the Zacks Consensus Estimate of $2.90 by 2.4% but declined 20.4% year over year from $3.73. Toll Brothers Inc. price-consensus-eps-surprise-chart | Toll Brothers Inc. Quote In the fiscal third quarter, total revenues of $2.66 billion surpassed the consensus mark of $2.60 billion by 2.4% but fell 9.7% from the year-ago quarter. For the quarter under review, Toll Brothers’ home sales revenues decreased 7.9% year over year to $2.65 billion from $2.88 billion. Home deliveries declined 10% to 2,662 units from 2,959 units in the year-ago quarter.Despite the lower volume, the average delivered price increased 2.3% year over year to $996,400 from $973,600, helping cushion the impact of fewer deliveries. The company ended the quarter with 471 selling communities compared with 420 in the prior-year period. Order momentum remained a constructive indicator in the quarter. Net signed contracts increased 5% year over year to 2,508 homes, while contract value rose 4.3% to $2.52 billion from $2.41 billion. The average price of signed contracts was $1,002,900 compared with $1,010,100 a year ago.Backlog ended the quarter at 5,312 homes valued at $6.24 billion, down 3.3% and 2.2%, respectively, from the prior-year period. The average price of homes in backlog increased to $1,174,400 from $1,161,000. Quarterly cancellations represented 5.4% of signed contracts, improving from 7.5% a year ago. While operations were sufficient to drive an earnings beat, profitability remained under pressure. Home sales gross margin declined to 23.9% from 25.6% a year ago, while adjusted home sales gross margin fell to 25.6% from 27.5%. Nonetheless, adjusted gross margin came in 35 basis points above management’s guidance.SG&A increased to 10% of home sales revenues from 8.8%, further constraining year-over-year profitability. Income from operations declined to $359.2 million from $487.7 million. Joint venture impairments totaled $39.6 million, while inventory impairments and write-offs included in home sales cost of revenues were $17.7 million compared with $23.3 million a year ago. Toll Brothers continued returning capital while maintaining substantial liquidity. The company repurchased about 1.4 million shares during the quarter for $206.8 million at an average price of $148.63. It also paid a quarterly dividend of 26 cents per share.Cash and cash equivalents totaled $1.06 billion at quarter-end, down from $1.26 billion at fiscal 2025 year-end and $1.11 billion at the end of the fiscal second quarter. Available liquidity under the senior unsecured revolving credit facility was $2.24 billion. The debt-to-capital ratio improved to 24.5% from 24.7% in the prior quarter, while net debt-to-capital increased to 15.6% from 15.4%. For the fourth quarter of fiscal 2026, TOL expects deliveries of 3,450-3,550 units and an average delivered price of $995,000-$1,005,000. Adjusted home sales gross margin is projected at 26%, while SG&A is estimated at 8.1% of home sales revenues. The tax rate is projected at 26%.For fiscal 2026, TOL forecasts deliveries of 10,500-10,600 units. The estimated range reflects a decline from the fiscal 2025 level of 11,292. Average delivered price is expected at $995,000-$1,000,000, indicating growth from $960,200 in fiscal 2025. The company continues to see adjusted home sales gross margin at 26.10% (a decline from the 27.3% reported in fiscal 2025) and SG&A at 10.10% of home sales revenues, with period-end community count projected at 480-490. Management also increased projected fiscal 2026 share repurchases to $700 million from $650 million. Toll Brothers currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Martin Marietta Materials, Inc. MLM reported outstanding second-quarter 2026 results, wherein adjusted earnings (from continuing operations) and revenues topped the Zacks Consensus Estimate and increased year over year.Martin Marietta’s results benefited from strong organic performance and contributions from acquisitions. Aggregates shipments increased 17% to a record 61.6 million tons, supported by infrastructure and heavy nonresidential demand. Heavy nonresidential demand also benefits from data center, power-generation and warehouse construction. Martin Marietta raised its 2026 revenue guidance to a range of $7.2-$7.4 billion, with a midpoint of $7.3 billion.CRH plc CRH reported exceptional second-quarter 2026 financial results with adjusted earnings and total revenues topping the Zacks Consensus Estimate and growing year over year. Positive pricing, favorable demand and acquisition contributions supported the quarterly growth. CRH completed 11 acquisitions during the quarter for $1.1 billion.The company reaffirmed 2026 net income guidance of $3.9-$4.1 billion, adjusted EBITDA guidance of $8.1-$8.5 billion and earnings guidance of $5.60-$6.05 per share. CRH expects public infrastructure spending and reindustrialization activity to support demand, while new-build residential conditions remain subdued.Quanta Services, Inc. PWR reported better-than-expected second-quarter 2026 results, with adjusted earnings and revenues beating the Zacks Consensus Estimate. The company’s performance benefited from strong demand for grid, generation and data-center infrastructure, broader self-perform capabilities, efficient resource utilization and solid execution across both segments.Quanta increased its 2026 revenue forecast to $39.3-$39.7 billion, representing a $4.55 billion increase at the midpoint from its prior outlook. Adjusted earnings are now projected to be in the range of $16.45-$16.95 per share, while adjusted EBITDA is expected to be between $4.09 billion and $4.21 billion. Free cash flow is forecast to be in the $2-$2.5 billion range. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Toll Brothers Inc. (TOL) : Free Stock Analysis Report Quanta Services, Inc. (PWR) : Free Stock Analysis Report Martin Marietta Materials, Inc. (MLM) : Free Stock Analysis Report CRH PLC (CRH) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research