Toll Brothers Inc., the largest luxury homebuilder in the United States, fell the most in nine years after reporting quarterly earnings that fell short of analysts' estimates, driven by the delay in sales of three units of expensive condominiums in New York City.
for the three months to October was $ 191.9 million, or $ 1.17 per share, compared to $ 114.4 million, or 67 cents, a year earlier, said the Horsham, Pennsylvania-based builder in a statement ]on Tuesday. The average estimate of 14 analysts was $ 1.19 per share, according to data compiled by Bloomberg.
Shares fell 7.3 percent to $ 46.95 at 1:48 p.m. In New York. Previously, they fell as much as 10 percent, the biggest intraday decline since early December 2008. Toll was the worst in an S & P housing construction index, which fell 1.7 percent.
In recent years it has been expanding into expensive markets such as California and New York, where price growth has been softening. But he also introduced T Select this year, a more affordable brand aimed at millennials.
While the company reported revenues for the fiscal fourth quarter of $ 2.03 billion, 9 percent, it was below the consensus of $ 2.09 billion. The three delayed units accounted for more than $ 43 million in revenues that will instead be recorded in the first quarter of 2018. That alone represented 3 cents of earnings per share, CFO Martin Connor said in a earnings conference call. Two of the units are expected to close this week, he said.
& # 39; Main reason & # 39;
"Your delay was the main reason for our average delivery price for the fourth quarter of 2017" along with revenues and other metrics "falling slightly below our expectations," Connor said.
The stock took a hit because investor expectations are high, said Drew Reading, a Bloomberg intelligence analyst. Toll shares rose 15 percent in the last month until yesterday.
"They asked for a lot of these actions," Reading said in a telephone interview. "With any kind of error in investor expectations, it's not surprising that you see a setback in the short term."
During today's conference call, CEO Douglas Yearley addressed concerns about the broad Republican plan to rewrite the US tax code. While coastal markets may be somewhat vulnerable if state and local taxes and mortgage interest cancellations are reduced, the company will benefit in other ways, such as having a lower corporate tax rate, he said.
"I reiterate what I said before: we do not believe that our buyers at our price are driven by the taxes they pay when it comes to buying our homes," Yearley said.
purchases of new single-family homes unexpectedly increased by 6.2 percent in October, at the strongest annual rate in a decade, according to data from the Department of Commerce. LGI Homes Inc., the builder with the strongest performance this year, serves first-time buyers.