Earnings season is in full swing, with huge numbers of companies having already given their latest numbers to investors, and Toll Brothers (NYSE:TOL) is about to release its quarterly earnings report. The key to making smart investment decisions with stocks releasing their quarterly reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

Homebuilders have been on fire over the past year, and Toll Brothers is a leader in the industry with its high-end focus. Let's take an early look at what's been happening with Toll Brothers over the past quarter and what we're likely to see in its quarterly report on Wednesday.

Stats on Toll Brothers

Analyst EPS Estimate


Year-Ago EPS


Revenue Estimate

$501 million

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

Will Toll Brothers build success for shareholders this quarter?
Contrary to investor sentiment, analysts have been fairly pessimistic on Toll's prospects in recent months. They've reduced consensus earnings-per-share estimates for the quarter by $0.06 and cut $0.20 off their full-year 2013 forecast. Yet the shares are up nearly 25% just since mid-November, adding to substantial gains from earlier in 2012.

Last quarter, Toll reported strong results, with big sales and income gains as orders improved and cancellation rates fell. The biggest concern many had was over the fiscal cliff, and with that issue resolved without any damage to the key mortgage-interest deduction, Toll's high-end clientele emerged relatively unscathed from modest tax increases.

Housing skeptics argue that homebuilder stocks have come too far, too fast, especially with smaller players Hovnanian (NYSE:HOV) and PulteGroup (NYSE:PHM) having more than doubled in the past year. Yet with residential investment at barely half of long-term average levels as a share of GDP growth, the contrarian argument is that homebuilders have plenty of room to run higher, and Toll's reputation for quality gives it a competitive advantage against its competitors.

In Toll's report, be sure to watch for signs that Toll may be thinking about raising capital to further expansion plans. KB Home (NYSE:KBH) did a common-stock and convertible-note offering earlier this month, raising more than $330 million without putting any downward pressure on the stock. If Toll needs capital, then now's the time to get it.

Click here to add Toll Brothers to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.