Toll Bros. Forecasts Another Brutal Quarter

Toll Brothers said Wednesday morning in a preliminary earnings report its FQ3 revenue dropped 21% amid a widespread housing slowdown. The number-one U.S. luxury homebuilder forecast net revenue of $1.21B, down from $1.53B a year ago. This will mark its forth straight quarter of shrinking revenue, as homebuilders struggle with falling prices, tightening credit availability, and buyers intent on waiting for even lower prices. "You need some confidence on the buyer's part that when they do buy that home, it's not going to go down in value," Victory Capital Management analyst Jack Lake told Bloomberg. Toll said Q3 net signed contracts would be down 31% to $727 million, backlog would drop 34% to $3.67B, and cancellations would be 23.8% vs. 18.9% last quarter. Toll estimated its pretax write-down for land and land options at $125-175 million. "We are now in the twenty-third month of a down housing market," CEO Robert Toll said. "With the uncertainties roiling the mortgage markets right now, the pace of home sales could slow further until the credit markets settle down." Toll reports Q3 results on August 22.

Sources: MarketWatch, Bloomberg
Commentary: Eight Key Points on the Real Estate Market • A Glance At US Bancorp and Homebuilder Stocks • Case Shiller Housing Composite: Worst Since 1991
Stocks/ETFs to watch: TOL. Competitors: DHI, CTX, PHM. ETFs: XHB

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Comments

[John Gaats]

I am biting my nails about my home builders holding.

2007 Aug 10 10:50 AM