Toll Brothers Earnings Are Mixed. The Stock Is Down.

(Patrick T. Fallon/Bloomberg)

Key Points

• Toll Brothers reported fourth-quarter earnings of $4.58 per share, missing analyst expectations of $4.88 per share.
• Fourth-quarter revenue of $3.4 billion exceeded expectations, and full-year revenue of nearly $11 billion also beat forecasts.
• The company’s stock declined 3.1% in after-hours trading following the mixed earnings report.

Luxury home builder Toll Brothers reported mixed earnings on Monday after the market closed. The stock was lower immediately after the report.

Toll Brothers said it earned $4.58 a share on $3.4 billion in revenue in its fourth quarter. Earnings were lower than the $4.88 analysts had expected, according to FactSet, though revenue beat.

For the full year, Toll Brothers earned $13.49 a share on just under $11 billion. Earnings missed consensus estimates that called for $13.83 a share, though revenue beat expectations for $10.81 billion.

The stock was down 4.1% in after-hours trading.

“Given soft demand across many markets, we remain focused on running our business in a disciplined manner and consistent with our long-term strategic objective of maximizing returns for stockholders,” Toll Brothers CEO Douglas C. Yearley said in a statement.

It has been a bumpy year for both home sales and builders. As of Friday’s close, the iShares U.S. Home Construction exchange-traded fund, which includes home builders and related companies, was down 0.7% this year, on pace for its worst yearly performance since 2022, according to Dow Jones Market Data.

Builders’ underperformance has come as high housing costs have squeezed would-be buyers out of the market—and clamped down on many builders’ profit margins as some companies have offered incentives and cut prices to move homes.

Housing industry dynamics risk remaining unfavorable next year, J.P. Morgan analyst Michael Rehaut wrote in a note earlier this month. “We maintain our more cautious stance on the sector for 2026, which we shifted toward entering 2025, as we continue to anticipate an unfavorable demand/supply backdrop resulting in additional pressure and downside risk for builder fundamentals, while valuations remain expensive.”

Toll, which sells homes at a median price around $1 million, is among the outliers, with its stock up about 10% this year. “Our cancellation rate remains the lowest in the industry, continuing to reflect the financial strength of our buyers and demonstrating that they remain comfortable and confident in completing their home purchases,” Yearley said on the company’s third-quarter earnings call in August.

Investors will likely look to the call on Tuesday for updates on the company’s strategy in a slow market. Toll Brothers’ home sales gross margin was 25.6% for its full year, lower than the prior year’s 26.6%, while its homes under contract, at 9,943 this year, beat expectations calling for 9,804. The two metrics measure builders’ ability to hold on to profits and generate new sales in a slow environment.

Investors also will expect an update on Toll’s building strategy in 2026. Yearley teased “all sorts of great details on 2026 in December” on the company’s third-quarter call. “We are positioned and very focused to have a good 2026,” he said at the time.

Toll Brothers expects to deliver 1,800 to 1,900 homes to customers in its first quarter, and 10,300 to 10,700 for all of 2026. It expects its margin in 2026 to be 26%, it said.

Write to Shaina Mishkin at shaina.mishkin@dowjones.com