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Research Alert: Toll Brothers Beats Q2 Estimates But Guides Q3 Below Expectations

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CFRA, an independent research provider, has providedwith the following research alert. Analysts at CFRA have summarized their opinion as follows:

Toll Brothers' Q2 revenue of $2.51B (-7% Y/Y) beat guidance and consensus, delivering 2,491 homes (-14% units) at ~$1,009k ASP (+8% Y/Y). EPS of $2.72 beat $2.59 consensus, driven by stronger-than-guided adjusted gross margin of 26.2% and favorable home mix. Strong operational execution demonstrated pricing power and cost control, though inventory impairments surged to $32.5M from $9.8M prior year. Q3 guidance fell short of consensus due to pull-forward of closings into Q2, but management raised full-year guidance across all metrics. Net orders grew 8% to $2.81B with backlog ASP rising to $1,171.8k, indicating higher-quality pipeline. However, sales pace per community declined Y/Y and spring selling season momentum of +23% sequential order growth fell short of typical +55% advance. We believe the Q3 shortfall reflects timing rather than fundamental weakness, though inventory impairments and moderated sales pace warrant monitoring in a challenging market environment.

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