What happened
Shares of luxury homebuilder Toll Brothers (TOL -1.53%) are on a tear -- up 13.6% as of 12:40 p.m. EDT already, and still rising, after the company reported Q3 earnings results that broadly outperformed expectations.
Expected to earn $1.03 per share on $1.81 billion in quarterly sales, Toll instead reported profits of $1.26 per share on sales of $1.91 billion.
Toll Brothers plans to build more houses at higher prices, and the plan is working. Image source: Getty Images.
So what
Deliveries of completed homes jumped 18% year over year in Q3, but Toll Brothers' revenues actually surged higher -- up 27% year over year, as the company not only sold more houses, but sold them at higher prices. Profits rushed ahead 45% as Toll earned far more than analysts had predicted it would.
Now what
The good news could keep on coming. In Q3, Toll reports that it signed contracts to build 2,316 more homes -- more than it delivered in the quarter -- and at a projected sales value of $2.03 billion, which was also more revenue than the company booked in the quarter. Both these facts suggest that sales and earnings will continue climbing in quarters to come.
As for this year in particular, Toll Brothers reiterated its previous prediction that adjusted gross margins will average 24% this year, on revenues projected to range from $6.76 billion to $7.22 billion -- "the highest annual revenues in the history of the Company," as management advised.
Looks like 2018 is shaping up to be a great year for Toll Brothers.
