Abstract

Toll Brothers will report fiscal third-quarter 2026 results on August 18, 2026 Post-Mkt; this preview summarizes last quarter’s performance, the current quarter’s forecast for revenue and EPS, and key viewpoints from recent institutional commentary ahead of the release.

Market Forecast

Current-quarter forecasts indicate revenue of 2.61 billion US dollars, implying an 8.31% year-over-year decline, and adjusted EPS of 2.92, implying a 19.09% year-over-year decline. Forecasts do not include explicit guidance for gross margin or net profit margin; EBIT is projected at 377.95 million US dollars, reflecting a 23.81% year-over-year decline. Home sales remain the primary revenue driver; last quarter this segment generated 2.51 billion US dollars, with land sales contributing 18.77 million US dollars. Within the home sales base, the strongest potential near term comes from actively selling communities that are converting backlog to deliveries; consolidated revenue was down 7.17% year over year last quarter, setting a lower base for the forecasted quarter.

Last Quarter Review

In the prior quarter, Toll Brothers reported revenue of 2.51 billion US dollars (down 7.17% year over year), a gross profit margin of 25.27%, GAAP net profit attributable to shareholders of 261.00 million US dollars, a net profit margin of 10.29%, and adjusted EPS of 2.72 (down 22.29% year over year). A notable highlight was sequential profitability: net profit increased by 23.54% quarter on quarter. The company’s core business was concentrated in home sales at 2.51 billion US dollars versus 18.77 million US dollars from land sales; at the consolidated level, revenue decreased 7.17% year over year as pricing/mix and delivery cadence normalized from the prior-year comparison.

Current Quarter Outlook

Main business: home sales revenue and margin trajectory

The forecast points to fiscal Q3 revenue of 2.61 billion US dollars and adjusted EPS of 2.92, implying year-over-year declines of 8.31% and 19.09%, respectively. That revenue path suggests deliveries and average selling price may both be below prior-year levels, while the EPS forecast indicates a softer operating margin profile versus last year. The EBIT estimate of 377.95 million US dollars implies a steeper year-over-year contraction than revenue, consistent with higher incentives, a different price/mix, or less fixed-cost absorption. Investors will focus on how backlog conversion translates into deliveries and revenue recognition during the quarter. Any commentary on cycle times, construction progress, and cancellation rates will help frame whether revenue pressure is primarily volume-driven or price/mix-driven. Margin color is equally important: last quarter’s gross margin was 25.27% and net margin was 10.29%; the direction of incentives, input costs, and overhead leverage this quarter will be central to the EPS outcome. The prior quarter delivered a sequential rebound in net income of 23.54%, a data point that establishes a constructive baseline for quarter-on-quarter momentum. If the company sustains delivery efficiency and controls incentives, the gap between year-over-year revenue decline and year-over-year EBIT/EPS decline could narrow into fiscal Q4. Conversely, if incentives or costs run ahead of plan, the implied year-over-year drop in EBIT could materialize as forecasted, keeping EPS closer to the current consensus band.

Most promising business: active community openings and quick move-in opportunities

Multiple recent community announcements across markets such as South Carolina, Utah, Nevada, New Jersey, Georgia, Idaho, and North Carolina point to a healthy pipeline of openings. While these actions mostly benefit orders and revenue in subsequent quarters as communities ramp, they can also provide near-term support through quick move-in homes where available. The company’s last quarter home sales revenue was 2.51 billion US dollars, and consolidated revenue declined 7.17% year over year; this sets a comparative backdrop for new-community contribution to stabilize mix and volume over time. From a near-term perspective, the most promising contribution is expected from communities that entered active selling in late fiscal Q2 and fiscal Q3, where model openings and new phases are attracting traffic. These additions expand the base of selling communities and support a steadier pace of orders that can translate into deliveries depending on construction stage and closing timing. The combination of build-to-order and quick move-in inventory allows flexibility to capture demand and smooth the delivery cadence, which is valuable when forecasts already assume an 8.31% year-over-year revenue decline. In earnings, investors will look for commentary on absorption rates and the ramp profile for recently opened communities. Clear signals of sustained orders and a stable incentive environment at these locations would help counterbalance projected year-over-year pressure in revenue and EBIT. Any details on closing schedules and the proportion of quick move-in deliveries in the mix would further illuminate how the quarter is tracking relative to the 2.61 billion US dollars revenue estimate.

Key stock price drivers this quarter

Delivery pace versus plan is the first catalyst. The 2.61 billion US dollars revenue estimate embeds assumptions about homes closed; surprises here, either due to construction timing or closing schedule shifts, can move results materially. Accompanying average selling price disclosures will help separate volume from price effects and indicate how much of the year-over-year decline is driven by mix rather than demand. Margin commentary is the second catalyst. The prior quarter’s gross margin of 25.27% and net margin of 10.29% serve as reference points; any change in incentives, options uptake, or input costs can alter the drop-through to EBIT and EPS. The 377.95 million US dollars EBIT estimate, implying a 23.81% year-over-year decline, signals the market is braced for some compression, so upside could emerge if incentives are stable and costs remain contained. Orders and backlog trends are the third catalyst. Although the quarter’s revenue depends on closings, order intake frames future revenue visibility. With new communities recently opening across several states, the pace of net orders and any commentary on cancellation trends will likely be scrutinized. A resilient order metric would help bridge to fiscal Q4 and mitigate concerns embedded in the forecasted EPS decline of 19.09%. Additional factors that can influence sentiment include the leadership transition that took effect this year and the announced COO succession planned for June 30, 2026. Stable execution through these changes and consistent capital return—such as the previously declared quarterly dividend—are supportive to the equity narrative when earnings are under year-over-year pressure. Finally, the recent amendment and extension of credit facilities adds financial flexibility and reduces near-term balance sheet noise, an incremental positive as the company navigates the delivery and margin cadence projected for this quarter.

Analyst Opinions

The balance of views in the past six months skews decisively bullish, with a ratio of bullish to bearish opinions at 4:0 in the sampled items. Recent rating actions and reiterations underscore confidence in near-term execution, even as consensus expects year-over-year declines in revenue and EPS this quarter. - KBW upgraded the shares to Outperform and lifted its price target to 161.00 US dollars. The upgrade cited resilient demand from the company’s target buyer base and an improved tone out of the previous quarter, pointing to a constructive setup into the print despite the soft year-over-year comparisons embedded in forecasts. - Wells Fargo reiterated a Buy rating with a 185.00 US dollars target. The view highlights the company’s ability to convert backlog and manage pricing/mix in the current environment, supporting a path to deliver on revenue and margin expectations as the year progresses. - Oppenheimer reaffirmed a Buy rating with a 180.00 US dollars target, focusing on operational consistency and the potential for delivery cadence and mix management to support earnings as community count expands. - Truist maintained a Buy rating with a 165.00 US dollars target, emphasizing the path to sustained profitability and a favorable risk-reward into the quarter given the stock’s valuation and expected order trends. Across these reports, analysts acknowledge that forecasts already anticipate year-over-year declines in revenue and profitability for fiscal Q3—2.61 billion US dollars and 2.92 in adjusted EPS, implying declines of 8.31% and 19.09%, respectively. The prevailing argument for the bullish stance centers on the potential for revenue and gross profit to track in line with or modestly ahead of these expectations if deliveries and incentives are managed tightly, alongside the incremental support from newly opened communities that bolster selling momentum. Another thread in the positive view is that prior-quarter execution—marked by a 23.54% sequential increase in net income and revenue and EPS beats versus the previous estimate baseline (by 97.58 million US dollars and 0.15 per share, respectively)—demonstrated a capacity to protect margins and deliver against set targets. In evaluating the upcoming report, bullish analysts will be focused on four confirmations. First, consolidated revenue close to 2.61 billion US dollars that demonstrates backlog conversion in line with plan. Second, a gross margin profile that remains near the mid-20s percentage context established last quarter, signaling stable incentives and healthy options uptake. Third, an EBIT outcome that narrows the gap between revenue decline and profit decline relative to the 23.81% year-over-year EBIT contraction implied in forecasts. Fourth, order intake and community-opening commentary that point to steady demand into fiscal Q4, helping frame the trajectory beyond this quarter’s expected year-over-year declines. Taken together, the dominant institutional perspective is that while consensus appropriately embeds softer year-over-year comparisons for the third fiscal quarter, the company’s delivery cadence, margin control, and expanding base of active communities create room to meet or slightly exceed the revenue and EPS estimates of 2.61 billion US dollars and 2.92. The degree to which management affirms or updates its nearer-term margin and delivery views—relative to last quarter’s 25.27% gross margin and 10.29% net margin—will likely determine whether the equity reaction skews positively post release on August 18, 2026.