The luxury home builder sold more homes at higher prices. Quarterly profit grew but missed estimates. Fred Katayama reports.
Toll Brothers sold more homes at higher prices in the latest quarter. The luxury home builder said its expansion in California, Texas, New York City, and entry into Seattle had paid off. CEO Douglas Yearly described the growth of the housing market as "steady." Toll's profit grew faster than its revenue, but it fell short of Wall Street's expectations due to higher expenses, higher reserves and a higher tax rate. Its gross margin growth fell on a yearly basis. Toll's stock gave back some of its 9-and-a-half percent gain this year in early trading. Toll foresees what it called "strong growth" in revenues and profit through October 2016. It's seeing some momentum. In the last five weeks, the company's signed contracts rose 21 percent. MKM senior analyst Megan McGrath said, "There's been some concern recently, especially around the health of the foreign buyer, which is not an insignificant percentage of the luxury market. That recent data of 20-percent-plus order growth sounds pretty good." She also said luxury buyers aren't scared off by higher interest rates, and many Toll customers buy in cash.