Battling the anemic housing market, home builder Toll Brothers (NYSE:TOL) revealed a 54% leap in fiscal third-quarter profits on Wednesday, but also tepid new orders and steeper-than-expected revenue declines.
The Horsham, Pa.-based luxury home builder said it earned $42.1 million, or 25 cents a share, last quarter, compared with a profit of $27.3 million, or 16 cents a share, a year earlier. Excluding items, it posted pretax income of $24.1 million.
Revenue slid 13% to $394.3 million, trailing the Streets view of $404 million. Gross margins fell to 13.8% from 14.2%.
This past quarter's results indicated some continued stabilization in the upscale housing market, albeit at a level dramatically below historical levels, CEO Douglas Yearley, Jr., said in a statement.
Toll Brothers said its net signed contracts rose just 2% to $406.7 million, or 713 units. The average price of net signed contracts was $570,000, flat from a year earlier.
Yearley said it is too soon to know how the recent turbulence in the financial markets and broader economy may impact the housing market.
We believe that historic low interest rates and the growing imbalance between housing production and demographics-driven demand bode well for the industry sooner or later: the key question, of course, is when, Yearley said.
Shares of Toll gained 4.7% to $15.45 ahead of Wednesdays open, putting them on track to trim their 2011 tumble of 22%.