Toll Brothers Q1 Revenue Drops 51% (TOL)

Tom Reese/Paul


Luxury homebuilder Toll Brothers Inc. (TOL)

said Wednesday its fiscal first quarter revenue fell 51% from the year-ago


The Horsham, PA-based company said its first quarter

homebuilding revenue came in at $409.3 million, significantly down from revenue

of $842.3 million the company posted a year earlier. Analysts, on average, had

been expecting revenue of $442.6 million.

Toll Brothers said its signed contracts fell 66% from the

year-ago period, to $128.1 million.

The company's lackluster results are indicative of the

overall housing market collapse. Rising unemployment, a tightening credit

market, and an overall lack of buyers have all combined to in recent months to

create a glut of unsold homes and sharply rising foreclosure rates.

As for full-year fiscal 2009 estimates, the company only

said that it expects revenue numbers significantly lower than those of 2008. On

average, analysts are expecting a first quarter loss of 30 cents per share.

The Bottom Line

The stock has technical support at the $10 price area. If the shares do stage a

rebound, we see overhead resistance in the $22-26 price range. The company’s

cash position is strong but we are not sure where the demand for new business

will come in this current economic environment. We are watching the

homebuilding sector for signs of positives, but we continue to be disappointed.

We will be looking for solid signs that a turn may be coming, but for now, we

would consider the sidelines our “home”.

Toll Brothers (TOL) does not currently pay a dividend.

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well

as a detailed explanation of our ratings

system here.

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