Toll Brothers' Q1 Earnings & Revenues Surpass Estimates

Toll Brothers, Inc. TOL reported impressive first-quarter fiscal 2026 (ended Jan. 31) results, with earnings and revenues beating the Zacks Consensus Estimate. The top and bottom lines also increased on a year-over-year basis.

The first-quarter performance was supported by strong demand from higher-income buyers and the resilience of the luxury housing segment. While the build-to-order model remains a core strength, the strategic availability of spec home inventory was also crucial in capturing demand.

However, results were partially offset by persistent macroeconomic headwinds, including elevated mortgage rates and ongoing affordability pressures that continue to weigh on broader housing demand. Performance was further tempered by a modest contraction in home sales gross margins and higher SG&A expenses, which collectively constrained overall profitability.

TOL’s Quarterly Earnings & Revenue Discussion

The company reported adjusted earnings per share (EPS) of $2.19, which surpassed the Zacks Consensus Estimate of $2.05 by 6.8% and increased 25.1% from the year-ago period.

In the fiscal first quarter, total revenues of $2.15 billion beat the consensus mark of $1.84 billion. The top line increased 15.4% on a year-over-year basis.

Inside Toll Brothers’ Q1 Results

The company’s total home sales revenues were up 0.5% (above our projection of a 1% year-over-year decline) from the prior-year quarter to $1.85 billion. Home deliveries were down 4.6% (above our expectation of a 7.3% decline year over year) from the year-ago quarter to 1,899 units. The average selling price (ASP) of homes delivered was $976,800 for the quarter, up 5.6% from the year-ago level of $924,600. Our model had expected ASP to be up 6.9% year over year to $988,200.

Net-signed contracts during the quarter were 2,303 units, down year over year from 2,307 units. The value of net signed contracts was $2.38 billion, up year over year from $2.31 billion. We had projected net-signed contracts to be up 2.8% in units and 2% in value for the quarter.

At the fiscal first-quarter end, Toll Brothers had a backlog of 5,051 homes, representing a year-over-year decrease of 20%. Potential revenues from backlog declined 13.3% year over year to $6.02 billion. The average price of homes in the backlog was $1,192,300, up from $1,099,200 a year ago.

The cancellation rate (as a percentage of signed contracts) for the reported quarter was 5.4%, down from 5.8% in the prior-year period.

TOL’s adjusted home sales gross margin was 24.8%, which contracted 20 basis points (bps) for the quarter. Selling, general and administrative (SG&A) expenses, as a percentage of home sales revenues, were 13.9%, up from 13.1% reported in the year-ago quarter.

TOL’s Balance Sheet & Cash Flow

TOL had cash and cash equivalents of $1.2 billion at the first-quarter fiscal 2026 end compared with $1.26 billion at the fiscal 2025 end. The debt-to-capital decreased to 24.4% from 26% at the end of fiscal 2025. The net debt-to-capital was 14.2% compared with 15.3% at the fiscal 2025-end. At the end of the fiscal first quarter, the company had $2.2 billion available under its $2.35 billion revolving credit facility, set to mature in February 2030.

During the first quarter of fiscal 2026, TOL bought back approximately 0.3 million shares for a total of $50.5 million.

At the end of the fiscal first quarter, the company controlled about 74,990 lots, 55.2% of which were under control rather than owned outright, ensuring sufficient land for future expansion.

TOL Unveils Q2 FY26 Guidance

For second-quarter fiscal 2026, Toll Brothers expects home deliveries in the range of 2,400-2,500 units (compared with 2,899 units delivered in the prior-year quarter) at an average price of $975,000-$985,000 (compared with $933,600 in the year-ago quarter).

Adjusted home sales gross margin is expected to be 25.50%, implying a decline from 26% in the year-ago period. SG&A expenses are estimated to be 10.7% of home sales revenues, indicating a rise from 9.5% in the year-ago period. The company expects the effective tax rate to be 26%.

FY26 Guidance by Toll Brothers

For fiscal 2026, home deliveries are still anticipated to be in the range of 10,300-10,700 units. The estimated range reflects a decline from the fiscal 2025 level of 11,292. It expects the period-end community count to be 480-490.

The company is still anticipating the average price of delivered homes to be $970,000-$990,000, indicating growth from $960,200 in fiscal 2025.

Toll Brothers still expects an adjusted home sales gross margin of 26%. This reflects a decline from the 27.3% reported in fiscal 2025.

SG&A expenses, as a percentage of home sales revenues, are now projected to be 10.25%, still an increase from the 9.5% reported in fiscal 2025. The company expects the effective tax rate to be 25.5%.

TOL’s Zacks Rank & Recent Construction Releases

Toll Brothers currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Masco Corporation MAS posted mixed fourth-quarter 2025 results, wherein the adjusted earnings surpassed the Zacks Consensus Estimate, while net sales missed the same. Both metrics tumbled on a year-over-year basis.

Masco’s fourth-quarter performance was largely in line with expectations as the company operated through a changing geopolitical and economic backdrop. It began restructuring actions to simplify operations, lower costs and reduce headcount. Masco also announced the integration of Liberty Hardware into the Delta Faucet business to better align brands and capabilities. For 2026, Masco expects demand across global repair and remodel markets to remain steady. Sales are projected to be flat to slightly higher on a currency-adjusted basis, with performance likely to outpace the broader market.

Jacobs Solutions Inc. J reported stellar first-quarter fiscal 2026 (ended Dec. 26, 2025) results, with adjusted earnings and revenues beating the Zacks Consensus Estimate and growing year over year.

Jacobs' quarterly results reflect stronger performance in the life sciences, data center, semiconductor, water and transportation sectors, alongside increased demand for digital consulting services, bolstering the quarter’s uptrend. With the announcement of acquiring the remaining stake in PA Consulting and favorable market fundamentals, Jacobs is optimistic about its performance in the remaining fiscal 2026. Adjusted net revenues are now expected to grow year over year between 6.5% and 10%, with adjusted EPS expected to be between $6.95 and $7.30.

Weyerhaeuser Company WY reported mixed fourth-quarter 2025 results, wherein its earnings topped the Zacks Consensus Estimate, but net sales missed the same. Meanwhile, on a year-over-year basis, both top and bottom lines decreased.

Weyerhaeuser’s fourth-quarter results were impacted by persistent market headwinds across key markets, characterized by softened pricing and volatile demand dynamics. Despite these challenges, the company continued to optimize its portfolio through disciplined, capital-efficient transactions. Looking ahead, Weyerhaeuser is well-positioned to navigate the current environment, supported by a strong balance sheet and flexible capital allocation framework as it executes its refreshed 2030 strategy to drive growth and capitalize on durable long-term demand fundamentals.

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