Toll Brothers Inc., the largest U.S. luxury-home builder, said fiscal fourth-quarter earnings rose as it sold more homes at higher prices.
Net income for the three months through October climbed to $147.2 million, or 80 cents a share, from $131.5 million, or 71 cents, a year earlier, the Horsham, Pennsylvania-based builder said in a statement Tuesday. The average of 16 estimates was for 83 cents a share, according to data compiled by Bloomberg.
Toll, the only large publicly traded builder focused on the luxury market, has expanded its presence in high-cost areas such as California and New York as job growth fuels demand for homes. Purchases of new houses nationwide jumped 10.7 percent in October, the most since August 2014, to a 495,000 annualized pace, the Commerce Department reported last month.
“Toll is one of our top picks heading into next year,” Megan McGrath, an analyst with MKM Holdings LLC in Stamford, Connecticut, said in a telephone interview Monday. “We believe Toll has a strong backlog of higher-margin properties that will allow itself to differentiate itself.”
The shares fell 1.8 percent to $36.85 at 10:28 a.m. New York time after earlier dropping as much as 5.4 percent.
While Toll Brothers missed analyst estimates, the stock “could recover depending on TOL’s commentary on its outlook for margins which it did not provide in the release,” McGrath said in a note to clients after the results were issued.
The company delivered 1,820 homes in the quarter, a 1 percent increase from a year earlier. The average selling price climbed about 6 percent to $790,000. New orders rose 12 percent to 1,437 homes, Toll Brothers said.
Toll Brothers is scheduled to hold a call with analysts to discuss earnings at 11 a.m. EST.