Toll Brothers, Inc.

What they do

Toll Brothers designs, builds, markets, and sells luxury single-family detached and attached homes, master-planned communities, and urban low-, mid-, and high-rise communities. It also develops and operates for-rent apartment and student housing communities through joint ventures, primarily under the brands Toll Brothers Apartment Living and Toll Brothers Campus Living. In September 2025, the company announced its intention to exit the multifamily development business.

Revenue drivers

• Home sales — Generated $10.84 billion in fiscal 2025, representing 99% of total revenue. Deliveries of 11,292 homes in fiscal 2025.
• Land sales and other — Generated $124.5 million in fiscal 2025 (1% of revenue), down from $283.4 million in fiscal 2024, which included a $185.0 million land sale in northern Virginia.
• Quick move-in (spec) homes — An increasing share of sales relative to traditional build-to-order homes; spec homes have lower gross margins but faster cycle times.
• Apartment Living (joint ventures) — At October 31, 2025, controlled 73 land parcels with approximately 22,300 planned or completed units, but the business is being divested (Kennedy Wilson sale).

Recent performance

In Q2 FY2026 (ended April 30, 2026), revenue was $2.53 billion (home sales $2.51 billion) and net income was $260.6 million ($2.72 diluted EPS), down from $2.74 billion revenue and $352.4 million ($3.50 EPS) in Q2 FY2025. Deliveries fell 14% year-over-year to 2,491 homes, and home sales gross margin declined to 23.9% from 26.0%. Net signed contracts rose 7% in units and 8% in dollars to 2,834 homes and $2.81 billion. For the six months ended April 30, 2026, revenue was $4.68 billion and net income $471.5 million.

Strategy

Management has increased the proportion of spec homes to attract quick move-in buyers, while strategically managing pricing and incentives to balance sales pace and margins. The company is exiting multifamily development, having sold a significant portion of its portfolio and operating platform to Kennedy Wilson. Toll Brothers is growing community count (9% year-over-year in Q2 FY2026) and controlling land for continued 8-10% growth in 2027. It continues to repurchase stock and raised its quarterly dividend.

Risks

• Housing demand volatility — Demand is sensitive to employment, consumer confidence, mortgage rates, and overall housing market conditions, which can lead to lower sales, cancellations, and inventory impairments.
• Economic conditions in operating markets — Adverse changes in local economies, job growth, or population trends can reduce demand and depress prices, particularly with increased speculation inventory.
• Inflation and interest rates — Rising costs for land, materials, and labor, along with higher interest rates, can hurt affordability and demand, pressuring margins and sales.
• Multifamily divestiture execution — The planned exit from multifamily involves selling retained assets over time; incomplete or delayed sales may tie up capital and expose the company to market risks.

Outlook

For Q3 FY2026, management guided 2,600-2,700 deliveries, average price of $965,000-$985,000, adjusted gross margin of 25.25%, and SGA of 10.0% of home sales revenue. For full-year FY2026, deliveries are expected at 10,400-10,700 units, average price $985,000-$1,000,000, adjusted gross margin 26.10%, and SGA 10.10%. Management raised full-year guidance across all key metrics, citing year-to-date performance and expects near-term softer demand with elevated incentives but longer-term positive fundamentals.