Is the bell finally tolling for Toll Brothers (NYSE:TOL) and the high-end housing market?

Even though the stock seemed to take yesterday's earnings report in stride, it has taken quite a tumble from its midsummer highs. Whether or not the housing "bubble" (and I use that term loosely) is popping or not, it's clear that the go-go growth at Toll is coming to an end for at least a little while.

You wouldn't necessarily know any of this just by looking at the financials from the company's fiscal fourth quarter. Revenue was up 40%, operating income was up about 77%, and net income was up 72%.

As you might have already guessed, the trouble comes next year. About a month or so ago, the company lowered its delivery guidance for next year; it now looks like income will only grow about 10% in fiscal 2006. To state the obvious, that's a pretty sharp drop-off from the recent growth rates.

While management chalked up some of the trouble to what I would consider "backlog management," investors might do well to be cautious. Predicting earnings based upon the backlog of homes expected to be delivered in 2006 could be tricky and misleading. If demand cools even more than expected, orders could be cancelled, and the company might be tempted to cut prices to keep deals from falling through. What's more, building material prices are still pretty high and the company could get squeezed between a softening end-market pricing environment and a not-so-soft cost environment.

But wait, there's more. For the year, insiders at Toll sold millions of their shares of the stock, but directed more than $118 million of shareholders' money toward the repurchase of about 2.8 million shares. So the company managers think it's a good idea to use company money to buy stock that they themselves don't want. Isn't that just nifty?

Although a more normal housing market wouldn't be the death knell of Toll Brothers, I'd be worried that more bad news could be on the way. Granted, I'm not a big fan of homebuilder stocks in general right now. I suppose that if I had to buy one, I'd go with one where expectations look a little stronger -- like WCI Communities (NYSE:WCI) or maybe Lennar (NYSE:LEN), which is scheduled to report earnings next week. But I'm frankly taking a pass on the whole sector for now.

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).