Toll Brothers’ Q2 results met Wall Street’s expectations as the company posted higher revenue and non-GAAP earnings per share, driven by resilient pricing in its luxury home segment. Management credited disciplined inventory management and a focus on affluent customers for steady demand, even as overall home sales volumes softened. CEO Douglas Yearley highlighted that the company’s average sales price increased while incentives rose modestly, reflecting a strategy to balance price and pace in a challenging housing market. The executive team also pointed to effective cost controls and efficiency gains as contributors to maintaining profitability amid industry headwinds.

Is now the time to buy TOL? Find out in our full research report (it’s free).

While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions From Toll Brothers’s Q2 Earnings Call

• Stephen Kim (Evercore ISI) asked about components of declining construction costs. CFO Martin Connor explained that both subcontractor trade negotiations and material supply contracts are showing modest improvements, but changes are market-specific.
• John Lovallo (UBS) questioned Toll Brothers’ ability to grow next year given backlog trends. CEO Douglas Yearley said community count growth and spec inventory provide flexibility, with the company positioned for a "good '26" if demand improves.
• Michael Dahl (RBC Capital Markets) inquired about sales pace trends and incentive levels. Yearley clarified that incentives increased mainly for finished specs and have stabilized recently, while web and foot traffic are up in August.
• Trevor Allinson (Wolfe Research) asked about development cost relief and timing of new community openings. Yearley reported little relief on development costs but confirmed that openings are well-distributed across regions and the quarter.
• Alan Ratner (Zelman & Associates) queried the sustainability of the 50% spec mix and its impact on margins. Yearley responded that the spec approach is likely to remain, as it aligns with shifting buyer preferences and offers capital efficiency.

Catalysts in Upcoming Quarters

In upcoming quarters, the StockStory team will watch (1) the pace and success of new community openings, (2) stabilization or improvement in construction and development costs, and (3) changes in incentive levels as a signal of demand trends. We will also monitor whether Toll Brothers’ spec inventory strategy continues to deliver flexibility and margin support as market dynamics evolve.

Toll Brothers currently trades at $138.90, up from $132.24 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free).

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