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

Toll Brothers, Inc. (TOL) today announced its earnings results for the recent quarter, reporting a diluted earnings per share of $3.73, which exceeded analysts’ expectations of $3.60. This marks a positive variance of $0.13, highlighting the company’s strong performance in a competitive market. The results reflect Toll Brothers’ continued resilience and ability to adapt to changing economic conditions.

Key Highlights:

• Net income for Q3 FY 2025 was $369.6 million, or $3.73 per diluted share, compared to $374.6 million, or $3.60 per diluted share in Q3 FY 2024.
• Home sales revenues increased by 6% to $2.88 billion, with 2,959 homes delivered, a 5% increase year-over-year.
• Net signed contract value remained flat at $2.41 billion, with a 4% decline in contracted homes to 2,388.
• Backlog value decreased by 10% to $6.38 billion, with homes in backlog down 19% to 5,492.
• Adjusted home sales gross margin was 27.5%, slightly above guidance, while SG&A as a percentage of home sales revenues improved to 8.8%.
• The company repurchased approximately 1.8 million shares for a total of $201.4 million.

In the third quarter of FY 2025, Toll Brothers reported strong financial results, with net income of $369.6 million and home sales revenues reaching $2.88 billion. CEO Douglas C. Yearley, Jr. expressed satisfaction with the quarter’s performance, highlighting the delivery of 2,959 homes at an average price of $974,000. He noted, “We achieved an adjusted gross margin of 27.5%, or 25 basis points above guidance,” and emphasized the company’s focus on balancing price and pace to maximize profitability amid ongoing affordability pressures and uncertain economic conditions.

Looking ahead, Toll Brothers remains optimistic about its financial position, with significant cash flows and liquidity. The company controls enough land to support community growth over the coming years, allowing for selective land acquisitions. Yearley stated, “As we enter the fourth quarter, we remain focused on executing at a high level, delivering value to our stockholders, and positioning our Company for success in fiscal 2026 and beyond.” The company has provided guidance for the fourth quarter, projecting deliveries of 3,350 units and an average delivered price per home between $970,000 and $980,000.

Toll Brothers, Inc. (TOL) has recently experienced a notable uptick in its stock price, with a 3.03% increase over the past week and a robust 13.07% rise in the last month. This momentum reflects a broader market optimism, particularly as the company showcases impressive earnings growth, evidenced by a two-year compound annual growth rate (CAGR) of 37.89% in earnings per share. However, the company’s revenue growth has been more modest, with a two-year CAGR of 0.79%, indicating potential challenges in scaling operations. Despite this, Toll Brothers maintains a solid net profit margin of 12.6%, suggesting effective cost management and profitability. The price-to-earnings ratio of 9.79 positions the stock as relatively undervalued compared to its peers, potentially attracting value investors. On the flip side, the negative free cash flow CAGR of -24.39% raises concerns about the company’s liquidity and operational efficiency. Overall, while Toll Brothers is navigating a complex landscape, its strong fundamentals and recent price performance may signal a promising outlook for investors.

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.