Luxury homebuilder Toll Brothers topped earnings and revenue projections late Tuesday while maintaining its full-year guidance. The homebuilder's financial report comes as a 12-month slide in U.S. existing home prices showed signs of slowing in January. TOL shares angled higher.
Fort Washington, Pa.-based Toll Brothers earned $1.70 per share in Q1 2023, up 37% compared to last year. The homebuilder's first-quarter revenue fell less than 1% to $1.78 billion. Ahead of earnings, analysts forecast Q1 EPS of $1.38 and sales of $1.74 billion.
Toll Brothers stock climbed 3% to 57.46 Wednesday during market trade. TOL shares are about 12% below a 63.29 buy point in a cup with handle base, according to MarketSmith analysis. Aggressive investors could target a possible entry if the stock cuts back above a down-sloping trendline in that base's handle.
That early entry would roughly coincide with the chart's 21-day exponential moving average, which sits near 57.82.
"Since the start of the calendar year, we have seen a marked increase in demand beyond normal seasonality as buyer confidence appears to be improving," CEO Douglas Yearley said in a statement.
The company delivered 1,826 units in the first quarter, near the high end of its guidance of 1,750-1,850.
Toll Brothers expects to deliver between 2,050-2,150 units in Q2 with an average home price of $980,000-$1,000,000. For the full year, the homebuilder predicts 8,000-9,000 units delivered with selling prices of $965,000-$985,000. In fiscal year 2022, Toll Brothers delivered 10,500 units.
In the first quarter 2023, the company's home sales revenue increased 3.5% with 5% fewer units, compared to last year.
Toll Brothers Stock: Home Prices Drop
Toll Brothers earnings report follows data from the National Association of Realtors (NAR) on Tuesday showing U.S. existing home sales dropped in January to a more-than 12-year low.
Existing home sales fell 0.7% to a seasonally adjusted annual rate of 4 million units last month. That's the lowest level since October 2010, but also a sharp improvement vs. recent declines. Home resales, which account for a large share of the U.S. housing market, plunged nearly 37% in January on a year-on-year basis.
Meanwhile, the median existing house price increased 1.3% from a year earlier to $359,000 in January. That is the smallest annual gain since February 2012, indicating homes may become more affordable. Last moth, properties on average remained available for 33 days, that's up from 26 days in December.
"Buyers are beginning to have better negotiating power," NAR chief economist Lawrence Yun said in a statement.
"Homes sitting on the market for more than 60 days can be purchased for around 10% less than the original list price," Yun added.
Toll Brothers stock ranks eighth in IBD's Building-Resident/Commercial industry group. TOL shares have a 98 Composite Rating out of 99. The stock also has a 90 Relative Strength Rating. The EPS Rating is 95 out of 99.
Please follow Kit Norton on Twitter @KitNorton for more coverage.
