Toll Brothers, the #1 U.S. luxury homebuilder, offered preliminary results this morning for its Q1 2007 revenues, backlog, and contracts. FQ1 2007 revenues were down 19% to $1.09 billion from $1.34 in Q1 2006, missing the average analyst estimate of $1.12b. Net signed contracts were $749m, down 34%. Q1-end backlog was $4.15 billion, a decline of 30% from its record of $5.95 billion in 2006. Toll estimated Q1 writedowns at anywhere between $60 and $160 million. CEO But Toll noted that "the pace of cancellations is starting to abate." Q1 cancellations of 29.8% are down from 36.9% last quarter, but well above the company's historical average of 7%. Strong markets include Jersey City, Manhattan and Brooklyn, while Detroit, Chicago and parts of Florida have "not yet stabilized." He concluded: "We continue to believe that buyer confidence is the key to a turnaround in the new home market. It appears that the media's sentiment toward the housing market is becoming more balanced and their messages are making customers aware that, in the current climate of attractive interest rates, motivated sellers and a generally healthy economy, now is a good time to buy a home."
Sources: Press Release, Bloomberg, MarketWatch
Commentary: Existing-Home Sales Dismal, But Expected To Pick Up • Homebuilder Stocks: Is the Worst Over? • Why There's No Such Thing As a Housing Bubble
Stocks/ETFs to watch: Toll Brothers Inc. (NYSE:TOL). Competitors: KB Home (NYSE:KBH), D.R. Horton Inc. (NYSE:DHI), Pulte Homes Inc. (NYSE:PHM), Hovnanian Enterprises Inc. (NYSE:HOV), Beazer Homes USA Inc. (NYSE:BZH), Centex Corp. (CTX), Lennar Corp. (NYSE:LEN). ETFs: streetTRACKS SPDR Homebuilders ETF (NYSEARCA:XHB), iShares Dow Jones U.S. Home Construction (BATS:ITB), PowerShares Dynamic Building & Construction (NYSEARCA:PKB)
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