Tesla Stock – Toll Brothers Earnings Beat Expectations. Here’s What to Know.

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The housing market is in need of homes for sale—and

Toll Brothers

is benefiting. The luxury home builder reported second-quarter earnings on Tuesday that surpassed analyst estimates and raised its guidance “based on the strength of our outlook for the remainder of this year and beyond.”

Toll Brothers (ticker: TOL) reported diluted earnings per share of $1.01, beating analyst consensus of 80 cents per share, according to FactSet. The company’s sales of $1.93 billion surpassed analyst expectations of $1.77 billion, and the quarter’s $1.84 billion in home sale revenues was a second-quarter record for the company, according to the release. Adjusted gross margins on home sales were 24.4% in the second quarter, surpassing Toll Brothers’ earlier guidance of 23.4%.

“Our business continues to operate at a very high level,” Douglas C. Yearley, Jr., Toll Brothers’ chairman and CEO, said in a release. “With strong demand and constrained industrywide supply, we have continued to raise prices in excess of cost increases.” The CEO also attributed the company’s second-quarter results to a focus on increasing profit margins and expanded product offerings.

Shares of Toll Brothers were about 0.5% higher in after-hours trading Wednesday following the results. The stock is up more than 40% year to date.

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Barron’s previously highlighted Toll Brothers as a company that could benefit from shifting buyer preferences and strength in the market for higher-end homes. The builder’s earnings beat comes as recent Census data shows housing starts and home sales fell further than expected in April.

Toll Brothers expects the strength in the housing market to continue. The home builder boosted its full-year guidance for adjusted gross margins on home sales to 24.6%, up from 24.3%, and said it expects to deliver at least 10,200 homes in 2021, an increase from the 10,000 minimum it predicted last quarter. The top of its guidance range for deliveries remained unchanged at 10,400.

“We are encouraged by the continued strength of the housing market, which is supported by a long-term supply-demand imbalance, favorable demographics, especially the drive to home ownership among millennials, low mortgage rates, and the greater overall appreciation for one’s home that has emerged out of the pandemic,” Yearley said.

The company will discuss its second-quarter results on a conference call Wednesday at 8:30 a.m. ET.

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