For a while there, housing anything was exploding in value. Small houses in rural areas were going for ridiculous prices, and in many places, buying empty land is still a challenge. But as so often happens, that changed and left companies like Toll Brothers (NYSE:TOL) in the lurch. Now, however, things seem to be changing again, and Toll Brothers is making houses while the sun shines.
RBC Capital, by way of analyst Michael Dahl, noted that sentiment so far has been “overly negative,” particularly given Toll Brothers’ target market of high-end homes on the West Coast. That should insulate it somewhat from the downturns seen elsewhere, and Dahl looks for “outsized order growth through the first quarter of 2024.” Naturally, Dahl has some concerns about the overall sustainability of growth but believes that Toll Brothers should be an outperformer.
Given Toll Brothers’ winning earnings report just two days ago, that’s no real shock. Toll Brothers turned in earnings per share of $2.85 for its second quarter figures, which was nicely ahead of analyst expectations calling for $1.92 per share. Meanwhile, the $2.51 billion Toll Brothers posted for revenue not only beat analysts’ expectations that looked for $2.07 billion but also beat the previous year’s figures by 10.1%. With a housing shortage apparently still going on in many places, Toll Brothers stands to make some real advances, given that it’s a homebuilder in a shortage.
Analysts, however, are somewhat split on Toll Brothers’ overall fortunes. With one Buy, two Holds, and one Sell rating, it’s almost a perfect split and makes for a Hold consensus rating. However, Toll Brothers stock also comes with 6.06% downside risk, thanks to its average price target of $64 per share.
