Toll Brothers Set to Report Q2 Earnings: Key Things to Watch

Toll Brothers, Inc. TOL is scheduled to report its second-quarter fiscal 2026 (ended April 30, 2026) results on May 19, after market close. The quarter is likely to reflect demand trends in the luxury housing market, pricing power, margins and the company’s ability to manage incentives in a still-challenging affordability environment.In the last reported quarter, the company’s adjusted earnings and revenues beat the Zacks Consensus Estimate by 6.8% and 16.4%, respectively. The top and bottom lines also increased on a year-over-year basis by 15.4% and 25.1%, respectively.TOL’s earnings surpassed estimates in three of the trailing four quarters and missed on one occasion, with an average surprise of 6.8%.How Are Estimates Placed for TOL Stock?The Zacks Consensus Estimate for fiscal second-quarter earnings per share (EPS) has remained unchanged at $2.57 in the past 60 days. The estimate indicates 26.6% year-over-year decline.The consensus estimate for total revenues is pegged at $2.41 billion, indicating a 12.1% year-over-year decline.Toll Brothers Inc. Price and EPS Surprise Toll Brothers Inc. price-eps-surprise | Toll Brothers Inc. QuoteLuxury Demand & Community Growth Likely Aided TOL’s Q2 SalesToll Brothers’ fiscal second-quarter revenues are expected to have benefited from resilient luxury housing demand, healthy pricing and higher community count. Management projected fiscal second-quarter deliveries in the range of 2,400-2,500 homes, which indicates a year-over-year decline from 2,899 homes delivered in the prior-year quarter. However, the company guided the average delivered price between $975,000 and $985,000, reflecting growth from $933,700 reported in the year-ago quarter. Our model predicts home deliveries to be down 15.4% year over year to 2,453 units. We expect the average selling price of the delivered units to be up 4.5% year over year to $975,900 in the fiscal second quarter.The company entered the quarter with improved sales momentum. Management noted that web traffic, foot traffic and deposits improved modestly year over year beginning in mid-January, supported by the spring selling season. Toll Brothers’ affluent customer base likely continued to support demand despite elevated mortgage rates and affordability pressures across the broader housing market. Approximately 24% of first-quarter buyers paid all cash, while mortgage buyers maintained low leverage levels.Strength in the luxury move-up segment and continued momentum in the North and Pacific regions are also likely to have supported the fiscal second-quarter sales. Management highlighted healthy pricing trends in several luxury communities and noted that nearly 30%-40% of communities experienced price increases during the fiscal first quarter. Moreover, Toll Brothers expected its community count to increase to 455 by the end of the second quarter from 445 in the fiscal first quarter, providing additional growth support.However, certain headwinds may have limited top-line growth. Softer conditions in Tampa, Atlanta, San Antonio and the Pacific Northwest are likely to have weighed on sales activity. Affordability challenges and uncertainty surrounding visa-related issues may also have caused some buyers to delay purchase decisions, thereby impacting the year-over-year performances.Product Mix May Pressure TOL’s Margins in Q2Toll Brothers expects adjusted home sales gross margin of 25.5% in the fiscal second quarter of 2026, down from 27.5% reported in the prior quarter, mainly due to unfavorable geographic and product mix. Lower contributions from the higher-margin Pacific region are likely to have weighed on profitability.Still, flat construction costs, improving production efficiencies and shorter cycle times may have supported margins. Incentives also remained stable at nearly 8% for the third consecutive quarter in the fiscal first quarter, reflecting disciplined pricing actions and are likely to have continued the same in the fiscal second quarter. Toll Brothers’ balanced mix of build-to-order and spec homes, along with strong design studio upgrade activity, is likely to have aided profitability and inventory turns. However, elevated selling costs and softer demand trends in certain regional markets may have continued to pressure overall margins.BacklogFor the fiscal second quarter, our model expects a total backlog of 5,354 units, down year over year by 11.7%, with potential revenues declining 6.9% to $6.34 billion.What Our Model Says for TOL StockOur proven model does not conclusively predict an earnings beat for Toll Brothers this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is not the case here, as you will see below.Earnings ESP: The company has an Earnings ESP of 0.00%. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.Zacks Rank: TOL currently carries a Zacks Rank of 4 (Sell).You can see the complete list of today’s Zacks #1 Rank stocks here.Recent Peer ReleasesD.R. Horton DHI delivered second-quarter fiscal 2026 results with earnings beating the Zacks Consensus Estimate but revenues missing the same. The quarter was marked by an 11% jump in net sales orders and progress in tightening finished inventory, even as affordability constraints kept incentives elevated.D.R. Horton updated fiscal 2026 consolidated revenue guidance to $33.5-$34.5 billion compared with the prior expectation of $33.5-$35 billion. This compares with $34.25 billion in fiscal 2025. D.R. Horton now expects homebuilding closings of 86,000-87,500 homes compared with the earlier guidance of 86,000-88,000. This compares with 84,863 in fiscal 2025.PulteGroup PHM reported first-quarter 2026 results, with adjusted earnings missing the Zacks Consensus Estimate and revenues surpassing the same. Lower consumer confidence and higher incentive activity weighed on profitability, partially offset by stable order trends, higher community counts and disciplined capital deployment.PulteGroup reported first-quarter 2026 earnings of $1.79 per share, down 30.4% from $2.57 per share in the year-ago quarter. Total revenues of $3.41 billion decreased 12.4% year over year.NVR, Inc. NVR reported first-quarter 2026 results, with earnings and Homebuilding revenues missing the Zacks Consensus Estimate. Both earnings and Homebuilding revenues also declined on a year-over-year basis.Earnings were $67.76 per share, down 29% from $94.83 a year ago. Homebuilding revenues were $1.83 billion. Consolidated revenues (Homebuilding & Mortgage Banking fees combined) amounted to $1.88 billion, down 22% on a year-over-year basis.Beyond Nvidia: AI's Second Wave Is HereThe AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. 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