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Toll Brothers Inc TOL Stock Quote

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Toll Brothers’ New Orders Plunge Amid Slowing U.S. Housing Market; 2022 Delivery Guidance Lowered

Analyst Note

| Brian Bernard, CFA, CPA |

With United States housing data deteriorating in recent months, we had expected Toll Brothers’ fiscal third-quarter new orders to fall short of prior-year levels, but the 60% year-over-year decline (to 1,266 orders) was much worse than we were anticipating. While the no-moat-rated homebuilder increased sales incentives (for example, mortgage buydowns or home design upgrades) as the quarter progressed, management refrained from becoming overly aggressive on incentives to boost sales pace at the expense of gross margin. Indeed, incentives, which increased to $30,000 per home on average in August, pale in comparison with average selling prices that exceeded $1 million. Nor has management resorted to wide-scale price adjustments to stimulate demand. Excluding the favorable effect of contract amendments (for home upgrades), new order ASP increased approximately 7% year over year to about $1.15 million.

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Company Profile TOL

Business Description

Toll Brothers is the leading luxury homebuilder in the United States with an average sale price well above public competitors'. The company operates in over 60 markets across 24 states and caters to move-up, active-adult, and second-home buyers. Traditional homebuilding operations represent most of company’s revenue. Toll Brothers also builds luxury for-sale and for-rent properties in urban centers across the U.S. It has its headquarters in Horsham, Pennsylvania.

1140 Virginia Drive
Fort Washington, PA, 19034
T +1 215 938-8000
Industry Residential Construction
Most Recent Earnings Jul 31, 2022
Fiscal Year End Oct 31, 2022
Employees 5,100

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