When all was said and done, what would have been a sloppy quarter for luxury builder Toll Brothers
Oh, sure, Toll's quarter ended in July included a loss of $29.3 million, compared with a profit of $26.5 million in the same quarter a year ago. But focusing on the most recent quarter, without its nearly $85 million in after-tax writedowns, the company would have earned about $55 million. Those results were solid enough to boost Toll's share price by $0.27 -- 1.09% -- on Thursday, a day when the Dow retreated by nearly 350 points.
And if it appears that the market is simply hoping that the builders have turned as a group, you need to know that Hovnanian's
But back to Toll, whose revenue was down by 34% in the quarter, while its net contracts were down by 27%. More importantly, buyer cancellations backed off somewhat, which might indicate that the company is beginning to gain traction against the effects of the housing bust.
For the current quarter, CEO Bob Toll and his minions expect that buyer incentives will cut into revenue, leading to a lower figure than that of the quarter ended in July. Nevertheless, calling upon a phrase he used in other recent quarters, Toll said he believes there's "pent-up demand" for new homes. But he adds that that demand will continue to be affected by the high number of foreclosed homes on the market.
So all in all, it was an OK quarter for Toll. I continue to believe that the company's luxury builder status will propel it to the head of the class whenever a real housing recovery manifests itself. I'd also look for it to be followed by KB Home
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Fool contributor and proud mortgage holder David Lee Smith doesn't own shares in any of the companies mentioned above. He does, however, welcome your questions or comments. The Fool has constructed one awfully sturdy disclosure policy.