Toll Brothers Q3 2026 earnings: results edge past estimates as margins narrow
Toll Brothers topped profit and revenue estimates for its fiscal Q3 2026, though margins narrowed from a year ago as the luxury homebuilder leaned on incentives amid high mortgage rates.
| Q3 2026 | Reported | Expected | Surprise |
|---|---|---|---|
| EPS | $2.97 | $2.94 | +0.9% |
| Revenue | $2.66B | $2.64B | +0.8% |
Key takeaways
- Toll Brothers’ profit and revenue both came in slightly ahead of what Wall Street analysts had expected for the quarter, a modest beat after analysts had sharply cut their forecasts in the months leading up to the report.
- The company delivered 2,662 homes in the quarter at an average price of about $996,000 — within its own guided range, but still fewer homes than the 2,959 delivered a year earlier, reflecting a slower housing market overall.
- Profitability narrowed compared with a year ago: the operating margin on homebuilding for the quarter was about 13.5%, down from 17.4% in the same quarter last year, largely because the company has been offering more buyer incentives and discounts to keep sales moving as mortgage rates stayed elevated.
- Looking at the trailing twelve months, gross margin sits at roughly 24% and net profit margin at about 12% — still solidly profitable levels for a homebuilder, though per-share earnings over that same trailing year are down slightly (about 2%) from the prior year, underscoring the gradual margin pressure.
- A brighter demand signal: net signed contracts for new homes rose about 5% from a year ago, suggesting buyer interest is holding up even as deliveries declined.
- The company’s backlog of homes sold but not yet delivered stood at about $6.24 billion, down roughly 2% from a year earlier — a rough gauge of revenue already lined up for coming quarters.
- Management has pointed to resilience among its luxury and move-up buyers, who tend to be less exposed to mortgage-rate affordability pressure because they are drawing on income growth, stock-market gains and home-equity wealth rather than needing to stretch to qualify for a loan.
- For the full 2026 fiscal year, Toll Brothers has been guiding to roughly 10,300–10,700 home deliveries at an average price of about $970,000–$990,000, giving investors a sense of the pace expected through the rest of the year.
- The report lands against a backdrop of a broader affordability squeeze in housing, with the average 30-year mortgage rate hovering near 6.6%-6.7% through the summer, which analysts had flagged as a headwind for builders generally.
Q3 2026 in context
| Metric | Jul 2026 | Jul 2025 | Change |
|---|---|---|---|
| Revenue | $2.7B | $2.9B | -9.7% |
| Net income | $280M | $370M | -24.2% |
| Free cash flow | $220M | $345M | -36.3% |
| Diluted EPS | $2.97 | $3.73 | -20.4% |
| Gross margin | 23.5% | 25.2% | -1.7 pts |
| Operating margin | 13.5% | 16.6% | -3.1 pts |
| Net margin | 10.5% | 12.6% | -2.0 pts |
Figures for the quarter ended Jul 2026 and the quarter ended Jul 2025, as reported to the SEC.
How the stock took it
Toll Brothers Inc closed at $145.45 on Aug 17, 2026, the last session before the report, and at $148.58 on Aug 19, 2026, the first session after it — +2.1% across the report.
Closes from the market's daily record. Each figure spans the report date — from the last session that closed before it to the first that closed after — because a company may report before the open or after the close.
Fundamentals
| Metric | Value | Period |
|---|---|---|
| Gross margin | 24.4% | Trailing 12 months |
| Operating margin | 14.6% | Trailing 12 months |
| Net profit margin | 11.7% | Trailing 12 months |
| Pretax margin | 15.5% | Trailing 12 months |
| EPS | $13.21 | Trailing 12 months |
| Revenue growth (YoY) | 3.6% | Trailing 12 months |
| EPS growth (YoY) | -2.0% | Trailing 12 months |
| Return on equity | 15.5% | Trailing 12 months |
Sources: company report · earnings call · Yahoo Finance / Zacks