Toll Brothers stock dips after apartment unit sale delayed, lowering Q4 earnings

• Toll Brothers experienced a 4.8% decline in stock price following disappointing fiscal Q4 earnings, which were impacted by delays in finalizing an asset sale worth $380 million and a decline in backlog value.

• Despite meeting or exceeding home-building metrics with $3.4 billion in home sales revenue and positive average home prices, the company reported a GAAP EPS of $4.58, falling short of analysts' expectations.

• For Q1, Toll Brothers projects deliveries of 1,800 to 1,900 homes, with an average home price between $985,000 and $995,000, while the full fiscal year forecast includes 10,300 to 10,700 unit deliveries.

• CEO Douglas C. Yearley emphasized a cautious outlook due to soft demand across many markets, with plans to operate the business sustainably while focusing on shareholder returns.

Recommendation Rating: Cautious Outlook for Toll Brothers (TOL)

Toll Brothers (TOL) saw its stock price dip by 4.8% during after-hours trading on Monday, primarily driven by a significant shortfall in fiscal Q4 earnings compared to Wall Street expectations. This downturn is attributed to a delay in finalizing the sale of its stake in the Apartment Living segment.

The value of the asset sale has been revised upward to $380 million from the initial $347 million, reflecting continued investments made since the deal was first announced in September. The company now anticipates the transaction will close in the first quarter of fiscal year 2026. The buyer, Kennedy Wilson (KW), will take on the management responsibilities of Toll Brothers’ remaining interests, as the company plans to divest its remaining assets in the multifamily development sector.

Chairman and CEO Douglas C. Yearley, Jr. remarked, "In our fourth quarter, we met or exceeded guidance across all of our core home-building metrics, achieving $3.4 billion in home sales revenue with an adjusted gross margin of 27.1% and an SG&A margin of 8.3%."