TOL

TOLL BROTHERS INC

Consumer Cyclical | Large Cap

$2.15

EPS Forecast

$1,932

Revenue Forecast

The company already released most recent quarter's earnings. We will publish our AI's next quarter's forecast around 2026-04-30

Toll Brothers’ Q3 2026: Backlog Strength and a Steady Revenue Forecast Keep the Luxury Builder in a Calculated Lane

TOL, the ticker for Toll Brothers, Inc. (NYSE: TOL), reported its fiscal third quarter 2026 results with an EPS of $2.97 on a diluted basis, down from $3.73 in the prior-year period. Net income came in at $280.1 million, and home sales revenues totaled $2.65 billion. The company’s backlog remains robust at $6.24 billion, with 5,312 homes in backlog. Toll Brothers reaffirmed its full-year revenue forecast of about $10.5 billion in home sales revenues and an adjusted gross margin around 26.1%. The quarter included a modest buyback of 1.4 million shares at an average price of $148.63 per share, totaling roughly $206.8 million. The numbers, while not a win on year-over-year EPS, reflect a disciplined execution in a high-priced, rate-sensitive market.

Key Takeaways

  • EPS: $2.97 per diluted share; net income $280.1 million. This marks a meaningful year-over-year decline versus $3.73 per diluted share in the prior-year quarter, underscoring margin and demand headwinds in a slower housing cycle.
  • Revenue and price: Home sales revenues of $2.65 billion; delivered homes 2,662 with an average price of about $996,400. The combination signals a high-end mix, even as volumes trend lower versus last year.
  • Margins: Home sales gross margin was 23.9% (vs. 25.6% in FY 2025’s Q3); adjusted home sales gross margin was 25.6% (excluding interest and inventory write-downs). Margin discipline remains a key feature in a competitive luxury segment.
  • Backlog and demand: Backlog value of $6.24 billion, with 5,312 homes in backlog (down from $6.38 billion and 5,492 backlog homes in the prior year’s Q3). Net signed contracts rose 5% year over year, reinforcing a resilient demand backdrop for Toll’s luxury product.
  • Guidance: Toll reaffirmed its full-year guidance—approximately $10.5 billion in home sales revenues and an adjusted gross margin around 26.1%—a signal that management expects the revenue trajectory and profitability to stay on course despite near-term softness.
  • Capital allocation: The company repurchased ~1.4 million shares at an average price of $148.63, spending about $206.8 million. This reflects a capital-allocation stance that aims to support earnings per share amid slower top-line growth.

What Management Said

Chief Executive Officer Karl K. Mistry framed the quarter as a demonstration of resilience in a challenging market. Toll Brothers “delivered solid third quarter results,” noting that the company satisfied the midpoint of its guidance with $2.65 billion in home sales revenues and 2,662 homes sold at an average price near $996,400. The executive highlighted an adjusted gross margin of 25.6%, modestly ahead of the low end of guidance, and pointed to growth in net signed contracts year over year. Management’s tone suggests a disciplined approach to pricing and volume, leaning on backlog as visibility while balancing investment with opportunistic buybacks.

What This Means for Toll Brothers and Sector Peers

Toll’s Q3 narrative is a study in contrasts: revenue and orders hold firm in a luxury market that remains price-competitive, while year-over-year earnings dip as margins compress. The reaffirmed full-year guidance implies confidence that the high-end housing cycle remains defensible, aided by a robust backlog and a patient capital allocation approach (the buybacks). In a broader sense, this sets up Toll as a bellwether for the luxury home segment—if Toll can sustain a roughly $10.5 billion revenue forecast and a mid- to high-20s adjusted gross margin, peers with similar product focus (and exposure to rate-sensitive demand) could follow a similar playbook: preserve backlog value, manage cost structure, and lean on buybacks when appropriate.

For sector peers, the takeaway is twofold. First, the luxury end of the market remains price-rich but demand-sensitive to borrowing costs; second, visibility improves when backlog remains healthy and orders are resilient. If the pace of net signed contracts continues to outpace or hold steady against prior-year levels, that could cushion margins across the sector even if near-term top-line growth is uneven. In short, Toll’s results suggest the long run remains constructive for well-capitalized luxury builders, but the near term will hinge on interest rates, inventory discipline, and the ability to convert backlog into profitable revenue.

Risks and Nuances to Watch

  • Interest-rate sensitivity remains a core risk pillar for the luxury housing cycle; even with backlog and pricing power, financing conditions can tighten demand.
  • Margin pressure persists as pricing power in a high-cost environment interacts with cost-of-care, materials, and labor dynamics.
  • Backlog remains a crucial gauge of demand; a steady or strengthening backlog supports earnings visibility, but declines could foreshadow slower revenue realization.
  • Seasonality and regional demand shifts could influence quarterly results; Toll’s performance will continue to hinge on its ability to convert backlog into profitable deliveries.

Bottom Line

Toll Brothers’ Q3 2026 results underscore a careful balance: a robust, high-end demand backdrop yields solid top-line contributions and a strong backlog, while year-over-year earnings retreat prompts attention to margins and cost management. The reaffirmed revenue forecast and margin target signal a disciplined view of the year ahead, even as the stock buys back shares to support earnings per share in a softer quarter. For investors tracking earnings prospects, the key questions around the EPS trajectory, EPS consensus expectations, and revenue forecast accuracy will be front and center as Toll and peers navigate a luxury housing market that remains dependent on the patience of buyers and the direction of interest rates.

Key Figures at a Glance

  • Toll Brothers ticker: TOL; Exchange: NYSE
  • EPS (diluted): $2.97
  • Net income: $280.1 million
  • Home sales revenues: $2.65 billion
  • Homes delivered: 2,662
  • Average home price (delivered): ~$996,400
  • Gross margin (home sales): 23.9%
  • Adjusted gross margin: 25.6%
  • Backlog value: $6.24 billion; Backlog homes: 5,312
  • Net signed contracts: +5% YoY
  • Year-to-date share repurchases: ~1.4 million shares; cost: ~$206.8 million
  • Full-year revenue forecast: ~\$10.5 billion; Adjusted gross margin target: ~26.1%