Home Builders Stocks Q3 Recap: Benchmarking Toll Brothers (NYSE:TOL)

January 14, 2025 at 04:02 AM EST

TOL Cover Image

Earnings results often indicate what direction a company will take in the months ahead. With Q3 behind us, let’s have a look at Toll Brothers (NYSE: TOL) and its peers.

Traditionally, homebuilders have built competitive advantages with economies of scale that lead to advantaged purchasing and brand recognition among consumers. Aesthetic trends have always been important in the space, but more recently, energy efficiency and conservation are driving innovation. However, these companies are still at the whim of the macro, specifically interest rates that heavily impact new and existing home sales. In fact, homebuilders are one of the most cyclical subsectors within industrials.

The 12 home builders stocks we track reported a mixed Q3. As a group, revenues beat analysts’ consensus estimates by 1.7% while next quarter’s revenue guidance was below.

Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 12.6% since the latest earnings results.

Toll Brothers (NYSE: TOL)

Started by two brothers who started by building and selling just one home in Pennsylvania, today Toll Brothers (NYSE: TOL) is a luxury homebuilder across the United States.

Toll Brothers reported revenues of $3.33 billion, up 10.4% year on year. This print exceeded analysts’ expectations by 5.2%. Overall, it was an exceptional quarter for the company with a decent beat of analysts’ EPS estimates.

Douglas C. Yearley, Jr., chairman and chief executive officer, stated: "I am very pleased with our fourth quarter results, which cap the strongest year ever for Toll Brothers."

The stock is down 17.9% since reporting and currently trades at $128.51.

Is now the time to buy Toll Brothers? Access our full analysis of the earnings results here, it’s free.

Best Q3: Skyline Champion (NYSE: SKY)

Founded in 1951, Skyline Champion (NYSE: SKY) is a manufacturer of modular homes and buildings in North America.

Skyline Champion reported revenues of $616.9 million, up 32.9% year on year, in line with analysts’ expectations. The business had an exceptional quarter with a solid beat of analysts’ sales volume and EBITDA estimates.

Although it had a fine quarter compared to its peers, the market seems unhappy with the results as the stock is down 4.1% since reporting. It currently trades at $87.19.

Is now the time to buy Skyline Champion? Access our full analysis of the earnings results here, it’s free.

Weakest Q3: Lennar (NYSE: LEN)

One of the largest homebuilders in America, Lennar (NYSE: LEN) is known for constructing affordable, move-up, and retirement homes across a range of markets and communities.

Lennar reported revenues of $9.95 billion, down 9.3% year on year, falling short of analysts’ expectations by 1.7%. It was a disappointing quarter as it posted a significant miss of analysts’ adjusted operating income estimates.

Lennar delivered the slowest revenue growth in the group. As expected, the stock is down 6.8% since the results and currently trades at $136.

Read our full analysis of Lennar’s results here.

Taylor Morrison Home (NYSE: TMHC)

Named “America’s Most Trusted Home Builder” in 2019, Taylor Morrison Home (NYSE: TMHC) builds single family homes and communities across the United States.

Taylor Morrison Home reported revenues of $2.12 billion, up 26.6% year on year. This result surpassed analysts’ expectations by 7.8%. Overall, it was a very strong quarter as it also logged an impressive beat of analysts’ EBITDA estimates.

The stock is down 2.9% since reporting and currently trades at $62.99.

Read our full, actionable report on Taylor Morrison Home here, it’s free.

Tri Pointe Homes (NYSE: TPH)

Established in 2009 in California, Tri Pointe Homes (NYSE: TPH) is a United States homebuilder recognized for its innovative and sustainable approach to creating premium, life-enhancing homes.

Tri Pointe Homes reported revenues of $1.14 billion, up 36.5% year on year. This print topped analysts’ expectations by 8.7%. It was a strong quarter as it also produced an impressive beat of analysts’ EBITDA estimates and a solid beat of analysts’ EPS estimates.

Tri Pointe Homes achieved the biggest analyst estimates beat and fastest revenue growth among its peers. The stock is down 17.3% since reporting and currently trades at $35.16.

Read our full, actionable report on Tri Pointe Homes here, it’s free.

Market Update

Thanks to the Fed's series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market has thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% each in November and December), and a notable surge followed Donald Trump's presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by the pace and magnitude of future rate cuts as well as potential changes in trade policy and corporate taxes once the Trump administration takes over. The path forward is marked by uncertainty.

Want to invest in winners with rock-solid fundamentals? Check out our Strong Momentum Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

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