Toll Brothers Inc. announced on Tuesday a decrease in quarterly profit and revenue. However, the builder remains positive about the future, citing lower mortgage rates as an encouraging factor and emphasizing its expanded appeal to buyers.
In the fourth quarter, Toll Brothers earned $445.5 million, or $4.11 per share, compared to $640.5 million, or $5.63 per share, in the same period last year. Total revenue for the quarter dropped from $3.7 billion to $3 billion, with home sales revenue experiencing an 18% decline to $2.95 billion. The company delivered 2,755 homes during the quarter, representing a 27% decrease compared to the previous year.
Analysts polled by FactSet had expected earnings of $3.72 per share on sales of $2.78 billion.
Toll Brothers expressed optimism as they anticipate the upcoming spring selling season in January. The recent 75-basis-point decrease in mortgage rates has been a positive development for the industry. The low inventory of resale homes, coupled with the appeal of new homes, has created a solid demand that is expected to be further bolstered by lower rates and lower inflation.
The company attributes its success to its strategy of expanding its home offerings to include lower price points, as well as its focus on increasing the supply of speculative homes and growing its community count. According to Toll Brothers, these initiatives have positioned them well in today’s market.
The long-term outlook for demand remains positive due to demographics, a supply-demand imbalance resulting from more than a decade of underproduction, and the aging of the existing housing stock in the country.
Following the announcement, Toll Brothers’ shares rose 2% during the extended trading session on Tuesday, after ending the regular trading day unchanged. Year-to-date, the company’s stock has seen a remarkable gain of approximately 75%, compared to a 19% increase for the S&P 500 index.