May 22 (Bloomberg) -- Toll Brothers Inc., the largest U.S. luxury-home builder, rose in New York trading after reporting the most orders since 2006 and profit that beat estimates.
Net income for the three months through April was $24.7 million, or 14 cents a share, compared with $16.9 million, or 10 cents, a year earlier, the Horsham, Pennsylvania-based company said today in a statement. The average of 14 analyst estimates was for earnings of 7 cents a share, according to data compiled by Bloomberg. The fiscal second-quarter results included a $13.2 million pretax gain tied to the settlement of litigation.
“The fundamental results this quarter continued improving, but we expect an accelerating improvement over the next four to six quarters,” Stephen East, an analyst with International Strategy & Investment Group LLC in St. Charles, Missouri, with a buy rating on Toll Brothers, said in a note today.
Demand for new homes has begun to recover as buyers take advantage of low mortgage rates and the supply of existing homes remains tight. The Commerce Department will probably report tomorrow that new-home sales rose in April to an annual pace of 425,000, according to the median of economist forecasts compiled by Bloomberg. That would be the fastest pace since January’s 445,000, which was a four-year peak.
Toll climbed 2.9 percent to $37.07 after earlier reaching $39.25, the highest intraday price since January 2006. Stocks fell after Federal Reserve Chairman Ben S. Bernanke told Congress that he will slow stimulus efforts if the employment outlook “improves in a real and sustainable way.”
Toll’s second-quarter revenue gained 38 percent to $516 million, according to today’s statement.
Home sales increased to 894 units from 671 a year earlier. The average price of homes delivered was $577,000, compared with $569,000 in the first quarter and $557,000 a year earlier.
The company signed contracts for 1,753 homes at a value of $1.19 billion, up from 1,290 homes at $754.7 million a year earlier. Both the dollar and unit figures were the highest since 2006.
Toll expects third-quarter revenue to increase 40 percent from the previous three months as more homes are completed at higher prices. The company is raising prices at 60 percent of its communities, according to Chief Executive Officer Douglas Yearley Jr.
“We are in the early stages of this recovery,” Yearley said in an interview on Bloomberg Television today. “We’re raising prices pretty aggressively.”
Toll Brothers, best known for its large single-family houses, has diversified into investing in distressed real estate and developing urban high-rise condos, apartments and student dormitories as Yearley pursues steadier revenue through housing booms and busts.
Toll has issued $400 million of debt since its last earnings report as it seeks to refinance past borrowings at a lower interest rate and raises money for land purchases.
Toll’s shares are up 15 percent this year, compared with a 20 percent gain for the 11-member Standard & Poor’s Supercomposite Homebuilding Index.
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