Toll Brothers said Thursday morning FQ2 net earnings fell 79% to $36.7 million ($0.22/share) -- coming up short of Street estimates of $0.25. In early May the company revised its Q2 forecast down from $0.42-0.57/share. Writedowns of $72.9 million lowered earnings by $0.44/share, vs. just $0.04/share last year. Net signed contracts dropped 25%. Revenue fell to $1.17 billion from $1.44 billion a year earlier, slightly ahead of the $1.12 billion forecasted. Toll said it was not comfortable updating its full-year guidance; in early May it said it would not make its previously forecasted $1.46-1.85: "Given the uncertainty surrounding sales paces, and market direction and, thus, the potential for and size of future impairments, we are not comfortable giving full earnings guidance at this time." It did say it expects to deliver 6,100-6,900 homes in 2007, and gave Q3 revenue guidance of $990 million to $1.28 billion and FY revenue guidance of $4.26-4.88 billion -- analysts had been looking for $1.04 billion and $4.38 billion. Shares are down 7.7% YTD.
Sources: Press release, Wall Street Journal, TheStreet.com
Commentary: Contrarian Investors Seek Value in Housing • A Play on Subprime Woes and Homebuilders: TOL vs. KBH - Barron's • Toll Brothers Warns of Q2 and Full-Year Shortfall
Stocks/ETFs to watch: Toll Brothers Inc. (NYSE:TOL). Competitors: Lennar Corp. (NYSE:LEN), D.R. Horton Inc. (NYSE:DHI), KB Home (NYSE:KBH), Pulte Homes Inc. (NYSE:PHM), Hovnanian Enterprises Inc. (NYSE:HOV), Beazer Homes USA Inc. (NYSE:BZH). ETFs: iShares Dow Jones U.S. Home Construction (NYSEARCA:ITB), streetTRACKS SPDR Homebuilders ETF (NYSEARCA:XHB)
Conference call transcript: Toll Brothers F2Q07 Preliminary
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