Toll Brothers (TOL) Announces FY 2025 Fourth Quarter Earnings Results

Toll Brothers, Inc. (TOL) today announced its earnings results for the most recent quarter. The company reported earnings per share (EPS) of $4.58, falling short of analysts’ expectations, which had estimated EPS at $4.88. This represents a miss of approximately 6.2 percent compared to the consensus estimate.

Key Highlights

• Fourth Quarter FY 2025 Financials:

  • Net income: $446.7 million; earnings per diluted share: $4.58.
  • Home sales revenues: $3.41 billion; delivered homes: 3,443.
  • Backlog value: $5.5 billion; homes in backlog: 4,647.
  • Home sales gross margin: 25.5%; adjusted gross margin: 27.1%.

• Full FY 2025 Financials:

  • Net income: $1.35 billion; earnings per diluted share: $13.49.
  • Home sales revenues: $10.84 billion; delivered homes: 11,292.
  • SG&A as a percentage of home sales revenues: 9.5%.

• Management Insights:

  • CEO Douglas C. Yearley, Jr. highlighted strong performance despite market challenges, with a focus on maximizing returns for stockholders.
  • The company plans to grow community count by 8% to 10% in FY 2026 and remains disciplined in land acquisitions.

Summary

Toll Brothers, Inc. reported its fourth quarter and full fiscal year 2025 results, showcasing a solid performance in a challenging market environment. For the fourth quarter, the company achieved a net income of $446.7 million, with earnings per diluted share at $4.58. Home sales revenues reached $3.41 billion, reflecting a slight increase in delivered homes compared to the previous year. However, the backlog value decreased to $5.5 billion, indicating a need for strategic adjustments in response to market conditions. The home sales gross margin was reported at 25.5%, with an adjusted gross margin of 27.1%.

CEO Douglas C. Yearley, Jr. emphasized the company’s resilience and strategic focus, stating, “Fiscal 2025 proved to be another strong year for Toll Brothers, as we executed well in a choppy environment.” He noted the company’s plans for community count growth of 8% to 10% in FY 2026 and highlighted the importance of balancing price and pace in response to local demand. The company is also transitioning away from multifamily development, having announced the sale of a significant portion of its Apartment Living portfolio. Overall, Toll Brothers remains committed to delivering strong financial results and returning capital to stockholders.

Toll Brothers, Inc. (TOL) has experienced a rollercoaster of price changes recently, with a notable decline of 2.63% over the past week, while the stock has managed a modest gain of 1.81% in the last month. However, looking at a broader timeframe, TOL has faced a significant drop of 10.86% over the past year, despite a more encouraging 27.40% increase over the last six months. This volatility comes against a backdrop of mixed fundamental metrics; the company’s price-to-earnings ratio stands at a lofty 56.44, indicating that investors are paying a premium for its earnings potential. Yet, the two-year compound annual growth rate (CAGR) for earnings per share is a modest 2.40%, and revenue growth has been even slower at 0.88%. Adding to the concern, free cash flow has seen a troubling decline of nearly 29.34% over the same period. On a positive note, Toll Brothers boasts a return on invested capital of 13.21% and a net profit margin of 12.31%, suggesting that the company is still managing to generate solid returns despite the challenges it faces. Investors will be keen to see if the recent price fluctuations can stabilize as the company navigates its growth trajectory.

Toll Brothers, Inc., together with its subsidiaries, designs, builds, markets, sells, and arranges finance for a range of detached and attached homes in luxury residential communities in the United States. The company operates in two segments, Traditional Home Building and City Living. It also designs, builds, markets, and sells condominiums through Toll Brothers City Living. In addition, the company develops, owns, and operates golf courses and country clubs; develops and sells land; and develops, operates, and rents apartments, as well as provides various interior fit-out options, such as flooring, wall tile, plumbing, cabinets, fixtures, appliances, lighting, and home-automation and security technologies. Further, it owns and operates architectural, engineering, mortgage, title, insurance, smart home technology, landscaping, lumber distribution, house component assembly, and manufacturing operations. The company serves move-up, empty-nester, active-adult, and second-home buyers. It has a strategic partnership with Equity Residential to develop new rental apartment communities in the United States markets. The company was founded in 1967 and is headquartered in Fort Washington, Pennsylvania.