Luxury-home builder Toll Brothers has rebounded impressively since the start of October, along with its industry. The stock has risen by two-thirds and now trades at 71 times forward earnings estimates.
This is the case even with a reported quarterly loss announced Monday:
Toll Brothers Inc. swung to a fiscal-first-quarter loss as fewer deliveries and increased cancellations weakened revenue for the luxury-home builder.
But the company, known for its sprawling suburban homes and high-end urban condos, said it was optimistic because contracts were the highest for any first quarter in five years. It also sees recovery along Florida’s east coast and in Phoenix, markets hard hit by the housing crash…
Revenue dipped 3.6% to $322 million. Analysts expected a per-share profit of two cents on $361 million in revenue, according to a survey conducted by Thomson Reuters.
It sounds like some are optimistic that the housing market is turning a corner or has already reached its bottom. On the other hand, it sounds like there is still a lot of potential volatility. Here is a mixed report:
Homebuilders have struggled to compete as foreclosed properties sell at a discount and the U.S. unemployment rate remains above 8 percent. Toll Brothers depends on people selling their homes and buying its more expensive residences.
Sales of previously owned U.S. homes rose in January to an annual pace of 4.57 million, the highest level since May 2010, the National Association of Realtors reported today from Washington. The results were below the median forecast of 4.66 million by 74 economists surveyed by Bloomberg…
Toll Brothers’ earnings miss wasn’t “significant,” because it was caused by the longer period needed to complete high-rise condos in New York, which accounted for its most profitable sales, Chief Executive Officer Douglas Yearley Jr. said on Bloomberg Television today.
“This is the best we’ve felt in about five years,” he said on “Street Smart” with Trish Regan. “For the first three weeks of February, our orders are up significantly. We’re seeing deposits up. We’re seeing traffic up.”
My translation: we are still far from clearly positive results in the housing market.
I don’t know how many houses the biggest builders build but the figures from Toll Brothers are intriguing. Toll Brothers attracts a lot of attention but they “delivered 564 homes in the latest quarter, down slightly from 570 homes a year earlier.” This is not a lot of homes. I assume Toll Brothers gets more attention then because they tend to build high-end homes?